Audit Risk

Hello Kim, Please help me with the following question, -You are planning the audit of Veryan Co, a new audit client which operates in the oil & gas exploration industry. Companies wishing to operate in this industry require a licence which is valid for 20 years. Veryan Co has been in existence for 30 years and has grown its revenue at an average of 12% per annum. During your planning meeting you were informed that the forecast profit before tax for this financial year is $9.5 million (prior year: $6 million) based on revenues of $124 million (prior year: $100 million). Which of the following is the LEAST appropriate materiality level to be used in the audit of Veryan Co? A $1.5 million B $1.0 million C $750,000 D $450,000 1. The answer is A. 2.Could you please explain how to reach the answer?The explanation given in the kit is a bit complicated to understand. Thanks