14-6 RESIDUAL DIVIDEND MODEL Walsh Company is considering three independent projects, each of which requires a $4 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here: Project H (high risk): Project M (medium risk): Project L (low risk): Cost of capital = 16% Cost of capital = 12% Cost of capital = 9% IRR = 19% IRR 13% IRR = 8% = = Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure calls for 40% debt and 60% common equity, and it expects to have net income of $7,500,000. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio