Target capital structure of firm is capital structure

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Reference no: EM132056396

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.

Reference no: EM132056396

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