Larrys Pork Roll Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $3,500,000 investment. These projects have different levels of risk, and therefore different costs of capital. Their projected IRRs and costs of capital are as follows:

Project A: Cost of Capital = 15%; IRR = 22%

Project B: Cost of Capital = 16%; IRR = 11%

Project C: Cost of Capital = 12%; IRR = 8%

Larry intends to maintain its 35% debt and 65% common equity capital structure, and its net income is expected to be $4,750,000. If Larry maintains its residual dividend policy (with all distributions in the form of dividends), what will its payout ratio be?

Group of answer choices

4.21%

52.11%

0.00%

33.69%