Q: How did you arrive at the projected 2014 Net Income of $235,957?
A: 2014 projected Net Income of $235,957 is the company’s 2013 Profit before Extraordinary Items of $222,727 increased by 0.0594%, i.e., ($222,727) x (1.0594) = $235,957.
In the written solutions, the above explanation is provided in Footnote 1 in the Cash Flow Snapshot Worksheet – 2014 Solutions
Q: Where did you come up with the 5.75 % to multiply against $222,727?
A: The launching point for our assessment of the values that we assign to the projected Business Drivers is the last recorded value for those Business Drivers. We change that last recorded value only if there is a compelling reason to do so. We have no compelling reason to change the 2013 sales growth rate of 5.94%. Thus we use it as the projected sales growth rate for 2014.
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