The capital budget forecast for the Santano Company is $725,000. The CFO wants to maintain a target capital structure of 45% debt and 55% equity, and it also wants to pay dividends of $675,000. If the company follows the residual dividend policy, how much income must it earn, and what will its dividend payout ratio be? Select the correct answer.

a. NI = $1,074,710 Payout = 62.92%

b. NI = $1,074,070 Payout = 62.88%

c. NI = $1,073,750 Payout = 62.86%

d. NI = $1,074,390 Payout = 62.90%

e. NI = $1,075,030 Payout = 62.94%