Correct answer & a concise explanation of the answer

14) Which of the following is the preferred method to forecast the financing items on balance sheet? the a) Assume that debt and equity are constant. Sum all forecasted assets except excess cash and all liabilities and existing debt and equity. Plug the model using newly issued debt or excess cash. b) Financing items should be forecasted first, taking into consideration the future funding needs of the company. Correspondingly, the assets that the raised capital will fund then be adjusted. should c) Forecast bal lance sheet items such that the company will look successful no matter what assumptions are used d) Assume that all liabilities e) Assume that debt and equity will grow at the same constant rate in all years going and equity will grow at the same rate as revenue growth forward. 15) Which of the following are true concerning forecasting interest income? I. It is a non-operating measure. II. Its typical forecast driver is revenue. III. It is typically the same from year to year for firms that generate high cash flow. The typical forecast ratio is interest income in the current period divided by excess cash in the previous period. IV. a) I and II only. b) None of the Above. c) I and IV only d) II and III only. e) III and IV only