(a) ABC Company has a target capital structure that consists of 60 percent debt and 40 percent equity. The company anticipates that its capital budget for next year will be $2 million. What is the companys dividend payout ratio, assuming that the company reports net income of $1.5 million and it follows a residual dividend payout policy?

(b) A company sells on terms of 3/10, net 30. Total sales for the year are $949,000. On average, fifty percent of the customers pay on the 10^th day and the rest pay on the 40^th day. Based on the information given, what is the average amount of receivables? What would happen to average receivables if the company toughened up on its collection policy with the result that all nondiscount customers paid on the 30^th day?