In a corporation, the book value of shareholders equity is always positive, while the market value can be positive or negative.

True

False

Bounded rationality refers to the situation that practice contracts tend to include every contingent situation a corporation may face in its transactions.

True

False

Economic profit is preferred over accounting profit as a measure of corporate past financial performance because it considers both explicit and implicit costs in its calculation.

True

False

You are a business economic consultant and were presented with the following information for RCS, Inc., for 2018, to work on.

Cost of goods sold 2,433,000

Depreciation 78,000

Gross sales Revenues 3,210,000

Advertising expenditures 68,000

Interest expenses 64,000

Management salary 240,000

Material purchase 2,425,000

Repair and maintenance costs 22,000

Returns and allowances 48,000

Taxes 51,000

Referring to the above data and assuming that the average growth rate of RCS net sales revenues over the previous five years of 2.5 percent will continue in the next couple of years, the companys best forecast of its net sales revenues for 2019 is closest to [Hint: use the forecasting method discussed in class.]

	a.	$3,241,050
	b.	$3,290,250
	c.	$3,339,450
	d.	None of the above