Wolverine Worldwide forecasts a capital budget of $650,000, and it wants to maintain a target capital structure of 40% debt and 60% equity. It also wants to pay $1.6 cash dividend/share of 200,000 total shares outstanding. If the company follows the residual dividend policy, how much net income must it earn to meet its capital requirements, pay the dividend, and keep the capital structure in balance?

• A. $710,000
• B. $645,000
• C. $615,000
• D. $678,038
• E. $584,250