Nigels Inc has the following data and it follows residual dividend model. Some of Nigels family members would like more dividends and they also think that the firms capital budget includes too many projects whose NPVs are close to zero. If Nigel reduced its capital budget to the indicated level, by how much could dividends be increased, holding other things constant?

Original capital budget $3,000,000

New capital budget $2,000,000

Net income $3,500,000

% Debt $40%