E-magine Design normally finances capital budgeting projects with 60 percent debt and 40 percent common equity. When retained earnings are sufficient to fund the equity portion of the capital budgeting needs, E-magine's WACC is 11 percent when new common stock must be issued, its WACC is 13 percent. E-magine is considering the following independent projects: Project D: Cost= $190,000; IRR=14.0% Project R: Cost= $170,000; IRR=13.5% Project E: Cost= $180,000; IRR= 12.0%. If E-magine expects to generate net income of $180,000 and it pays dividends according to the residual policy, what will its dividend payout ratio be?