Question: Julphar Co. uses the residual dividend model to determine its common dividend payout. This year the company expects its net income to be $2 million,

Julphar Co. uses the residual dividend model to determine its common dividend payout. This year the company expects its net income to be $2 million, and it expects to have a 25 percent common dividend payout ratio. The company’s target common equity ratio is 40 percent, and the firm is financed with only common equity and debt. What is the company’s forecasted total capital budget for the year? *

a. $1.25 million

b. $2.25 million

c. $2.50 million

d. $3.75 million

e. None of the above

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