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 $825,000. 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 = $1,224,750 Payout = 67.58%

b. NI = $1,224,000 Payout = 67.46%

c. NI = $1,223,750 Payout = 67.42%

d. NI = $1,224,500 Payout = 67.54%

e. NI = $1,224,250 Payout = 67.50%