Quantitative Problem: Lane Industries is considering three independent projects, each of which requires a $2.8 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:
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Project H (high risk):
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Cost of capital = 14%
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IRR = 16%
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Project M (medium risk):
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Cost of capital = 10%
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IRR = 8%
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Project L (low risk):
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Cost of capital = 6%
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IRR = 7%
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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 $4,300,000. If Lane establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to 2 decimal places.