Waksh Company is considering three independent projects, each of which requires a $4 million investment. The estimated internal rate of return I

(IRR) and cost of capital for these projects are presented here:

Project H (high risk) Cost of capital = 16% IRR = 19%

Project M (medium risk) Cost of capital = 12% IRR = 13%

Project L (low risk) Cost of capital = 9% IRR = 8%

The projects cost of capital vary because the project have different levels of risk. The company's optimal capital structure calls for 40% debt and 60% common equity, and it expects to have net income of $7,500,000. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio?