Green receives the models from each of the candidates and schedules second interviews. To prepare for the interviews, Green compiles a summary of the candidates' key assumptions in Exhibit 2. Exhibit 2 Summary of Key Assumptions Used in Candidates' Models Cost of sales 2013 SG&Aet sales ratio will be the Metric Candidate A Candidate B Candidate C Net sales will grow at the average annual Industry sales will grow at the same rate as Net sales will row 50 basis oints slower Net sales growth rate in net sales over the 2010 nominal GDF', but Chrome will have a 2 . g p . . than nominal GDP. 2012 time period. 2013 gross margin will be the same as the average annual gross margin over the 20102012 time period. percentage points decline in market share. 2013 gross margin will increase by 20 basis points from 2012. 2013 gross margin will decline as costs increase by expected ination. 2013 SG&A will grow at the rate of 2013 SG&Aet sales ratio will be the the 2012 rate. 2013 effective tax rate will be the same as Income taxes the 2012 rate. SG&A expenses same as the average ratio over the 2010 ination. same as the 2012 ratio. 2012 time period. 2013 interest expense assumes the 2013 interest ex ense will be the same as 2013 interest expense will be the same as Interest expense effective interest rate will be the same as p the aver-age expense over the 20102012 the 2012 interest expense. . . time period. 2013 effective tax rate will be the same as the aver-age effective tax rate over the 20102012 time period. 2013 effective tax rate will equal the blended statutory rate of 30%. Angela Green, an investment manager at Horizon Investments, intends to hire a new investment analyst.After conducting initial interviews, Green has narrowed the pool to three candidates. She plans to conduct second interviews to further assess the candidates' knowledge of industry and company analysis. Prior to the second interviews, Green asks the candidates to analyze Chrome Network Systems. a company that manufactures internet networking products. Each candidate is provided Chrome'snancial information, presented in Exhibit 1. Exhibit 1 Chrome Networks stems Selected Financial Information (55 millions) Net sales Cost of sales Gross prot Selling, general, and administrative (SG&A) expenses Operating income Interest expense Income before provision for income tax Provision for income taxes Net income Green asks each candidate to forecast the 2013 income statement for Chrome and to outline the key assumptions used in their analysis. The job candidates are told to include Horizon's economic outlook for 2013 in their analysis, which assumes nominal GDP growth of 3.6%, based on expectations of real GDP growth of 1.6% and ination of 2.0%