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Suppose RCS Enterprises had an additional $500,000 of depreciation expense in 2016, then the dollar impact of this change in depreciation expense on earnings (E),

Suppose RCS Enterprises had an additional $500,000 of depreciation expense in 2016, then the dollar impact of this change in depreciation expense on earnings (E), cashflow from operating activities (OCF) and on end-of-year cash balance (CB) will be, respectively:

a.E increase $395,000; OCF increase $105,000 and CB increase $105,000

b.E decrease $395,000, OCF decrease $105,000 and CB decrease $105,000

c.E decrease $395,000, OCF increase $105,000 and CB increase $105,000

d.E increase $395,000, OCF decrease $105,000 and CB increase $105,000

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

Cost of goodssold2,433,000

Depreciation78,000

Gross salesRevenues3,210,000

Advertisingexpenditures68,000

Interestexpenses64,000

Management salary240,000

Materialpurchase2,425,000

Repair and maintenance costs22,000

Returns andallowances48,000

Taxes51,000

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 company's best forecast of its net sales revenues for 2019 is closest to

a.$3,241,050

b.$3,290,250

c.$3,339,450

d.None of the above

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