Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2017, for $846,000. The equity method of accounting is to be used. Steinbart's net assets on that date were $1.90 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Steinbart immediately begins supplying inventory to Alex as follows: Inventory held at the end of one year by Alex is sold at the beginning of the next. Steinbart reports net income of $85,750 in 2017 and $121,350 in 2018 and declares $20,000 in dividends each year. What is the equity income in Steinbart to be reported by Alex in 2018? $39,450. $35,290. $48,150. $54,150