Question
Assume the following information about a firms investment in a marketable equity security. Cost of the investment when purchased (at the beginning of Year 1)
Assume the following information about a firms investment in a marketable equity security. Cost of the investment when purchased (at the beginning of Year 1) $10 Market value of investment at end of Year 1 $18 Market value of investment at end of Year 2 $8 Investors % ownership of investee 20% Investees earnings for Year 1 $50 Investees total dividend payments for Year 1 $10 Investees earnings for Year 2 (loss) - $20 Investees total dividend payments for Year 2 $10 If the firm (the investor) is an active investor with significant influence, the total effect on the firms net income from its investment for the second year is which of the below?
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