Reconciliation/valuation problem 15 points.

XYZ Company recently released earnings and the stock is trading at $30.00 per share or roughly 10 times earnings. This is well below the companys normal range of 20-25 times earnings which corresponds to the expected growth rate for the company. When you look at the income statement you see the following:

Pretax income $30,000

Income tax expense 8,000

Income from continuing operations 22,000

Discontinued operations 8,100

Net Income $30,100

Shares outstanding 10,000

Net earnings per share $ 3.01

In addition to the above, you determine that the results of operations included a $5,000 non-recurring loss from litigation and that the companys normal tax rate is 25%. Based on this information a) prepare a reconciliation of Net Income as reported to recurring NICO, b) calculate the recurring NICO per share and C) calculate the PE ratio using the recurring NICO per share. THE PRICE OF THE STOCK IS $30.00 PER SHARE.

Print your reconciliation here (10 points):

Net Income as reported $30,100

Include these items in your linked data:

b) Recurring NICO per share (2 pt) _____________________________

c) Adjusted PE Ratio (2 pt) ________________________________________________

d) (1 pt): Is the stock over, under or adequately valued at $30.00?__________________