The projected misstatement can be calculated using ratio estimation. The ratio of the actual misstatement to the sample book value is divided by the population book value to project the misstatement for the entire population. The ratio is $420,000 (actual misstatement) divided by $12,000,000 (sample book value), which equals 0.035. When this ratio is applied to the population book value of $20,000,000, the projected misstatement is 0.035 multiplied by $20,000,000, which equals $700,000.