Lane Industries is considering three independent projects, each of which requires a $2.4 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:
| Project H (high risk): |
Cost of capital = 15% |
IRR = 17% |
| Project M (medium risk): |
Cost of capital = 8% |
IRR = 6% |
| Project L (low risk): |
Cost of capital = 8% |
IRR = 9% |
Note that the projects' costs of capital vary because the projects 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 $3,800,000.
If Lane establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to 2 decimal places.