Video Excel Online Structured Activity: Residual dividend model A 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: Project H (High risk): Cost of capital = 16% IRR = 19% Project M (Medium risk): Cost of capital = 13% IRR = 11% Project L (Low risk): Cost of capital = 7% IRR = 10% N Note that the projects' costs of capital vary because the projects have different levels of risk. The company's timal capital structure calls for 25% debt and 75% common equity, and it expects to have net income of $14,996,000. 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 ITINE 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 B D F A Residual dividend model F G Awn 1 2 3 4 Each project's investment cost Cost of capitaly - Cost of capitalm IRRM - IRRL $6,000,000 3.00% 1.00% 5 6 O co v Cost of Capital 16.00% 13.00% 7.00% Internal Rate of Return 19.00% 11.00% 10.00% Project H (High Risk) M (Medium Risk) 10 L (Low Risk) 11 12 Firm's Capital Structure Weights. 13 % debt in capital structure, Wd 14 % common equity in capital structure, Wc 15 16 Net income 17 18 Calculation of Capital Budget: 25.00% 75.00% $14,996,000 Include in Budget (Y/N) + Investment Cost Formulas 19 20 21 22 23 24 Project H (High Risk) M (Medium Risk) L (Low Risk) Total Capital Budget #N/A #N/A #N/A #NA #N/A #N/A #N/A Calculation of Capital Budget Financed with Common Fruity 25 Formulas Sheet1 + Calculation Mode Automatic Workbook Statistics B C D Wu E F 75.00% 14 % common equity in capital structure, Wc 15 16 Net income 17 18 Calculation of Capital Budget: $14,996,000 Include in Budget (Y/N) Investment Cost Formulas 19 20 21 22 23 24 Project H (High Risk) M (Medium Risk) L (Low Risk) Total Capital Budget #N/A #N/A #NA #N/A #N/A #N/A #N/A Formulas #N/A Calculation of Capital Budget Financed 25 with Common Equity: 26 Common equity required 27 Calculation of Common Dividends 28 Using Residual Model: 29 Common dividends 30 31 Calculation of Dividend Payout Ratio: 32 Dividend payout ratio 33 #N/A NA #N/A 34 35 36 37 38 Sheet1 + Calculation Mode: Automatic Workbook Statistics