Question 1 0/1 Submit Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure calls for 45% debt and 55% common equity, and it expects to have net income of $14,467,000. 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. X 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 Question 1 0/1 Video Submit Excel Online Structured Activity: Residual dividend model Walsh Company is considering three independent projects, each of which requires a $6 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented below: IRR = Project H (High risk): Cost of capital = 15% 19% Project M (Medium risk): Cost of capital = 12% IRR = 13% Project L (Low risk): Cost of capital = 8% IRR = 12% Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure Residual dividend model 1 Each project's investment cost 1 Cost of capital cost of capital 5 IRRRR 6 56,000,000 300% 100% ? Project H (High Risk) M Medium Roa) L (Low Risk) Cost of Capital ernal Rate of Retur 15.00% 19.00% 12.00% 13.00 8.00% 12.00% 10 Firm's Capital Structure Weight: 23 % debt in capital structure, 14 common equity in capital structure, 15 16 Net income 45.00% 55.00% $14487,000 18 Calculation of Capital Budget: Include in Budget IVN Investment Cost 19 20 Formulas ANA Project H (High Risk) M Medium Risk) LLOW Risk Total Capital Budget ANA NA Formulas NA Calculation of Capital Budget Financed 25 with Common Equity 26 Common equity required Calculation of Common Dividends 28 Using Residual Model: 29 Common dividends 30 3 Calculation of Dividend Payout Ratio: 32 Dividend payout ratio 33 34 NIA WNIA 2 HARRRR99 36 37 39 40 44 45 46 47 48 49 50 51 52 53 14 56 57 58 60 988SOBA 8889 65 66 68