using 1.414 is correct - it's a quilter's magic number:
...if you know the side measurement of a square (or know the short side of a right triangle) and want to know the diagonal (long side of a triangle), multiply the side/short measurement by 1.414.
...if you know the length of the diagonal of a square (or long side of a right triangle) and want to know how large to cut a square so you get that size diagonal, divide the diagonal (long side) by 1.414.
As several others have said - round up and trim later. This is a great tool for square in a square, figuring setting triangles, etc.