Marcus, Inc. has a capil budget of $1,500,000 and it wants to pay a dividend of $600,000. Its target capital structure is 45% debt and 55% equity. How much net income must it earn to meet its captial budgeting requirements and pay the dividend if it follows a residual dividend policy. It wants to maintain its capital structure of 45% debt and 55% equity.
a. $825,000
b. $1,275,000
c. $1,425,000
d. $675,000
e. none of above