For the next two questions suppose the following holds: Strategic Systems Inc. expects to have a net income of $800,000 during the new target capital structure is 40 percent debt and 60 percent common equity. The Capital Budgeting has determined that the optimal capital budget for next year million. If Strategic uses the residual dividend model to determine next year's dividend is the expected dividend payout ratio?
a) 40%
b) 25%
c) 20%
d) 15%.