Walsh Company is considering three independent projects, each of which requires a $3 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects is presented below:

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%

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 $7,500,000. If Walsh establishes its dividends from the residual dividend model, what will be its payout ratio?