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CFAI Text Question 9, Reading 44, Equity Private company val

This question says capex to support future sales is .15 of “incremental sales”
What is incremental sales? Please show the numerical example of how they arrived at this number of 900,000
Is it the amount that is .15 of next year’s expected increase of 3% (6 million additional sales next year?)

Yes you are correct.
Sales at t0 = $200mil
Sales at t1 = $206mil (200 x 1.03)
Additional capex = Incremental sales x 0.15 = (206-200) x 0.15 = .9m = 900,000
Incremental means increase, addition

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