Jackson Publishing, Inc. (JPI), publishes two newspapers and, until recently, owned a professional baseball team. The baseball team had been losing money for several years and was sold at the end of 2011 to a group of investors who plan to move it to a larger city. Also in 2011, JPI suffered an extraordinary loss when its Raytown printing plant was damaged by a tornado. The damage has since been repaired. A condensed income statement follows:

$\begin{array}{|cc}
\hspace{3cm} & \text{JACKSON PUBLISHING, INC }\\
\hspace{3cm} & \text{INCOME STATEMENT}\\
\hspace{3cm} & \text{FOR THE YEAR ENDED DECEMBER 31, 2011}\\
\text {Net revenue} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & &\$41,000,000\\
\text {Costs and expenses} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & & 36,500,000\\
\text {Income from continuing operations} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & &\$4,500,000\\
\text{Discontinued operations:} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & &\\
\text {Operating loss on baseball team} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & \$(1,300,000)&\\
\text {Gain on sale of baseball team } & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & 4,700,000& 3,400,000\\
\text{Income before extraordinary items} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & & \$7,900,000 &\\
\text{Extraordinary loss:} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & & & \\
\text{Tornado damage to Raytown printing plant} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots & & (600,000)\\
\text {Net income} & \cdots\cdots\cdots\cdots\cdots\cdots\cdots\cdots & & \$7,300,000\\
\end{array}$

Instructions

On the basis of this information, answer the following questions. Show any necessary computations and explain your reasoning.

c. Given your assumptions in part b, but given that JPI did sell the baseball team in 2011, what would you forecast as the company's estimated net income for 2012?