Fauver Industries Plans to Have a Capital Budget of $650,000

Fauver Industries plans to have a capital budget of $650,000. It wants to maintain a target capital structure of 40% debt and 60% equity, and it also wants to pay a dividend of $225,000. If the company follows the residual dividend policy, how much net income must it earn to meet its investment requirements, pay the dividend, and keep the capital structure in balance?

A) $584,250
B) $615,000
C) $645,750
D) $678,038
E) $711,939