Ribbon Industries reported sales of $3 million and net income of $400,000 for 2010. The retained earnings balance at the end of 2012 is $7 million. Ribbon Industries has a dividend payout ratio of 30%. If sales are expected to increase by 25% next year, what will be the projected balance in retained earnings using the percent of sales method? show work. ( already tried A. but says its wrong)

Select one:

a.$7,350,000

b.$6,720,000

c.$7,280,000

d.$8,750,000