In a February 15, 2020 Press Release, Choice Hotels announced the company's 2019 fourth quarter and full year results. Using the data from this press release, create 2020 budget and forecast. http://investor.choicehotels.com/financial-performance-and-presentations?item=46 To complete the budget, use the following information: Revenues are expected to grow at a rate of 2.5% according to the full-year outlook. Given the expected growth and recent investments, expenses are expected to increase by 1%. Income taxes are expected to be 22% To complete the forecast, use the following information: The low-range forecast is expected to be 2% The mid-range forecast is expected to be 2.5% The high-range forecast is expected to be 3% Forecast Forecast Forecast Budget Low Midpoint High Consolidated Statements of Income - USD ($) Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2020 Dec. 31, 2020 Dec. 31, 2020 REVENUES: Royalty fees $388,151 Initial franchise and relicensing fees $27,489 Procurement services $61,429 Marketing and reservation system $577,426 Owned Hotels $20,282 Other $40,043 Total revenues $1,114,820 OPERATING EXPENSES: Selling, general and administrative $168,833 $172,210 $173,054 $173,898 Depreciation and amortization $18,828 $19,205 $19,299 $19,393 Marketing and reservation system $579,139 $590,722 $593,617 $596,513 Owned Hotels $14,448 $14,737 $14,809 $14,881 Total operating expenses $781,248 $796,873 $800,779 $804,685 Impairment of goodwill -$3,097 $(3,159) $(3,174) $(3,190) Gain on sale of assets, net $100 $102 $103 $103 Operating income $318,642 $325,015 $326,608 $328,201 OTHER INCOME AND EXPENSES, NET: Interest expense $46,807 $47,743 $47,977 $48,211 Interest income -$9,996 $(10,196) $(10,246) $(10,296) Loss on extinguishment of debt $7,188 $7,332 $7,368 $7,404 Other (gain) loss -$4,862 $(4,959) $(4,984) $(5,008) Equity in net (income) loss of affiliates $9,576 $9,768 $9,815 $9,863 Total other income and expenses, net $48,713 $49,687 $49,931 $50,174 Income before income taxes $269,929 $275,328 $276,677 $278,027 Income taxes $47,051 $60,572 $60,869 $61,166 Net income $222,878 $214,756 $215,808 $216,861 Basic earnings per share: Basic earnings per share (in dollars per share) $4.00 $4.00 $4.08 $4.10 $4.12 Diluted earnings per share (in dollars per share) $3.98 $3.98 $4.06 $4.08 $4.10 Target Expectation Expectation Expectation Questions: 1. Which revenue category is the most important to forecast accurately? Explain your rationale for your selection. 2. Which expense category is the most important to forecast accurately? Explain your rationale for your selection. 3. Explain thoroughly why budgeting revenue and operating expense is important.