Farmer Corporation purchases 45% of the common stock of Jackson, Inc. at a purchase price of $13.5 million cash. During the year, Jackson reports net income of $1,850,000 and pays $340,000 of cash dividends. At the end of the year, the market value of Farmer’s investment is $14.8 million.
What is the year-end balance of the equity investment in Jackson?
a. $14,179,500
b. $15,010,000
c. $14,332,500
d. $13,500,000
e. None of the above