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 $350,000. 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 = $748,430 Payout = 46.72%

b. NI = $748,110 Payout = 46.70%

c. NI = $747,470 Payout = 46.66%

d. NI = $748,750 Payout = 46.74%

e. NI = $747,790 Payout = 46.68%