Video Excel Online Structured Activity: Residual dividend model Walsh Company is considering three independent projects, each of which requires a $5 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 - 17% IRR = 20% Project M (Medium risk): Cost of capital 14% IRR - 13% Project L (Low risk): Cost of capital -7% 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 35% debt and 65% common equity, and it expects to have net income of $13,889,500. 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 D G E 3 Each project's investment cost 4 Cost of capital, - Cost of capitalu 5 IRR - IRR 6 $5,000,000 3.00% 2.00% Cost of Capital Internal Rate of Retum 17.00% 20.00% 14.00% 13.00% 7.00% 11.00% 35.00% 65.00% 7 Project 8 H (High Risk) 9 M (Medium Risk) 10 L (Low Risk) 11 12 Fim's Capital Structure Weights: 13 % debt in capital structure, wo 14 % common equity in capital structure, w 15 16 Net Income 17 18 Calculation of Capital Budget: 19 Project 20 H (High Risk) 21 M (Medium Risk) 22 L (Low Risk) 23 Total Capital Budget 24 $13,889,500 Include in Budget (Y/N) Investment Cost Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A Calculation of Capital Budget Financed 25 with Common Equity: 26 Common equity required 27 Formulas #N/A Formulas #N/A #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 34 35 36 37 #N/A