1. Watt Corp. acquired a 25% interest in Sauer Co. on January 1, 2007, for $500,000. At that time, Sauer had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2007, Sauer paid cash dividends of $160,000 and thereafter declared and issued a 5% common stock dividend when the market value was $2 per share. Sauer's net income for 2007 was $360,000. What is the balance in Watts investment account at the end of 2007? (2 marks)