On 1/1/21, Vitale Co. invested $1,000,000 in Demo Co. for 25% of its outstanding stock. The equity method of accounting is appropriate.Demo Co. pays out 40% of net income in dividends each year.

Vitale received $50,000 in Demo dividends during 2021. What wasDemo's2021 Net Income?

Select one:

a.$500,000

b.$125,000

c.$87,500

d.$156,250

e.$111,111