There are a few balance sheet items we can project at this time but, as you can see from the pink shading, most require separate schedules that we will build in subsequent steps and link to the balance sheet. Of those few items we can project now, let’s first look at PP&E. Gross PP&E increases by the amount of capital expenditures in each period. In reality, the gross PP&E might be periodically reduced by disposals (i.e. asset sales, divestitures), but because such events are lumpy and hard to predict, we assume that gross PP&E grows in perpetuity. Accumulated depreciation grows with depreciation expense each period.