The capital budget of Creative Ventures Inc. is $800,000. The tax rate is 20%. The company wants to maintain a target capital structure that is 50% debt and 50% equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual dividend policy, what will be its total dividend payment?
a. $200,000
b. $240,000
c. $80,000
d. None of the options
