Answer (C) is correct.
The prior-year dividend payout ratio was 50%. Hence, if prior-year net income was X, the total dividend payout would have been 50%X. If earnings increase by 20%, current-year income will be 120%X. If dividends increase by 15%, the total dividends paid out will be 57.5%X (115% × 50%X), and the new dividend payout ratio will be 47.9% (57.5%X ÷ 120%X).