Alabama Industrial Manufacturers (AIM) follows the constant payout ratio dividend policy by paying out 70 percent of earnings each year. This year AIM expects the dividend payment to be 5 percent higher than last year's payment, which was $280,000. What is the amount of net income that AIM expects to generate this year?
A. $294,000
B. $980,000
C. $420,000
D. $686,000
E. $400,000
Answer: C
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