Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 2017 for $400,000 cash. A contingent payment of $16,500 will be paid on April 15, 2018 if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year, and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability-weighted approach, is $3,142.

What will Harrison record as its Investment in Rhine on January 1, 2017? A) $400,000. B) $403,142. C) $406,000. D) $409,142. E) $416,500.