1. Ocala Clinic's services result in $25,000 in daily billings to third-party payers. On average, it takes the clinic 45 days to collect its receivables. If the interest rate on loans needed to finance receivables (cost of carrying receivables) is 8 percent, what is the clinic's dollar annual cost of financing its receivables balance?
A. $25,000
B. $80,000
C. $90,000
D. $65,000
E. $105,000
2. The target capital structure of a firm is the capital structure that
a. minimizes the operating risk of the firm's assets.
b. maximizes the tax shield created by debt.
c. minimizes the default risk of long-term debt.
d. maximizes the price of the firm's stock.
e. none of the above.