Question

Go to the Earnings Projections worksheet. Pranjali has entered most of the income and expense data on the worksheet. She knows the income from municipal grants will be $25,000 in 2022, and estimates it will be $40,000 in 2026. She needs to calculate the income from municipal grants in the years 2023–2025. The grants should increase at a constant amount from year to year. Project the income from Municipal grants for 2023–2025 (cells D5:F5) using a Linear Trend interpolation.

Answer 1

To calculate the municipal grants for 2023-2025, determine the yearly increase by dividing the total increase ($15,000) over the number of increments (4), resulting in a $3,750 annual increase. Then, add this increment annually to get the projected income: $28,750 for 2023, $32,500 for 2024, and $36,250 for 2025.

Step-by-step explanation:

To project the income from municipal grants for the years 2023–2025 using a Linear Trend interpolation, we first need to calculate the yearly increase from 2022 to 2026. We have the municipal grants income for 2022 as $25,000 and for 2026 as $40,000. The difference over the four years is $40,000 - $25,000 = $15,000, which means the grants increase by $15,000 over four years.

The annual increase is therefore:

Annual Increase = Total Increase / Number of Increments

Annual Increase = $15,000 / 4 = $3,750

Now we can calculate the municipal grants for each year:

• 2023: $25,000 + $3,750 = $28,750
• 2024: $28,750 + $3,750 = $32,500
• 2025: $32,500 + $3,750 = $36,250

The projected incomes for municipal grants for the years 2023, 2024, and 2025 are $28,750, $32,500, and $36,250, respectively.

Answer 2

To estimate the municipal grants for 2023-2025, calculate the annual increase between 2022 ($25,000) and 2026 ($40,000). Divide the total increase ($15,000) by 4 years to get the annual increment of $3,750. Add this increment successively to get projections for each year: 2023 ($28,750), 2024 ($32,500), and 2025 ($36,250).

Step-by-step explanation:

To project the income from municipal grants for the years 2023 to 2025 using linear trend interpolation, first calculate the annual increase from 2022 to 2026. The increase is $40,000 in 2026 minus $25,000 in 2022, which equals $15,000 over 4 years. Therefore, the annual increase is $15,000 ÷ 4 = $3,750.

Using this annual increase, the projected income can be calculated as follows:

• 2023: $25,000 + $3,750 = $28,750
• 2024: $28,750 + $3,750 = $32,500
• 2025: $32,500 + $3,750 = $36,250

These amounts should be entered into cells D5:F5 respectively on the Earnings Projections worksheet.