On January 2, 2015, Howdy Corporation purchased 12% of Ranger Corporation's common stock $50,000 and classified the investment as avaialble for sale. Ranger's net income for the years ended December 31, 2015 and 2016, were $10,000 and $50,000, respectively. During 2016, Ranger declared and paid a divdend of $60,000. There were no dividends in 2015. On December 31, 2015, the fair value of the Ranger stock owned by Howdy Doody had increased to $70,000. How much should Howdy Doody show in the 2016 income from this investment?

1.) $26,000

2.) $7,200

3.) $20,000

4.) $27,200

Please show work!