On January 1, 2007, Yang Corporation acquired 25 percent of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008 respectively.
Based on the preceding information, what amount will be reported by Yang as income from its investment in Spiel for 2008, if it used the equity method of accounting
1. $11,250
2. $7,500
3. $26,250
4. $18,750