Excel Online Structured Activity: Residual dividend model Walsh Company is considering three independent projects, each of which requires a $3 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented below: Project H (High risk): Cost of capital = 15% IRR = 18% Project M (Medium risk): Cost of capital = 13% IRR = 12% Project L (Low risk): Cost of capital = 8% IRR = 11% 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 $4,230,000. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to two decimal places. % Check My Work Reset Problem Residual dividend model Each project's investment cost Cost of capital - Cost of capital IRRM-IRR $3,000,000 2.00% 1.00% Project H (High Risk) M (Medium Risk) L (Low Risk) Cost of Capital 15.00% 13.00% 8.00% Internal Rate of Return 18.00% 12.00% 11.00% Firm's Capital Structure Weights: % debt in capital structure, Wa % common equity in capital structure, w 40.00% 60.00% Net income $4,230,000 Calculation of Capital Budget: Net income $4,230,000 Calculation of Capital Budget: Include in Budget (Y/N) Investment Cost Formulas Project H (High Risk) M (Medium Risk) L (Low Risk) Total Capital Budget #N/A #N/A #N/A #N/A #N/A #N/A #N/A Calculation of Capital Budget Financed with Common Equity: Common equity required Formulas #N/A Calculation Common Dividends Using Residual Model: Common dividends #N/A Calculation of Dividend Payout Ratio: Dividend payout ratio #N/A