Residual Distribution Policy Harris 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 $4 million 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 = 21% Project B: Cost of capital = 11%: IRR = 15% Project C: Cost of capital = 7%: IRR = 11% Harris intends to maintain its 35% debt and 65% common equity capital structure, and its net income is expected to be $14, 738, 500. If Harris maintains its residual dividend policy (with all distributions in the form of dividends), what will its payout ratio be? %