Suppose that LaPearla’s revenues are expected to grow at a rate of 10% and all elements of the income statement and balance sheet are sales-driven except for the tax burden, which remains at 30%. LaPearla’s pro forma net income for 2006 is closest to:

A. €2.2 billion.

B. €2.5 billion.

C. €2.8 billion.

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LaPearla Company Income Statement for Year 2005 (in millions) LaPearla Company Balance Sheet, End of Year 2005 (in millions). Revenues 10,000 Current assets 2,000 Cost of goods sold 5,500 Net plant and equipment 18,000 Gross profit 4,500 Total asser 20,000 Selling, general, and 800 administrative expenses Operating income 3,700 Current liabilities 1,000 Interest expense 500 Long-term debt 5,000 Earnings before taxes 3,200 Common stock and paid-in capital 500 Taxes 960 Retained earnings 13,500 Net income 2,240 Total liabilities and equity 20,000