On January 1, 2007, Rotor Corporation Acquired 30 Percent of Stator

On January 1, 2007, Rotor Corporation acquired 30 percent of Stator Company's stock for $150,000. On the acquisition date, Stator reported net assets of $450,000 valued at historical cost and $500,000 stated at fair value. The difference was due to the increased value of buildings with a remaining life of 15 years. During 2007 and 2008 Stator reported net income of $25,000 and $15,000 and paid dividends of $10,000 and $12,000, respectively. Rotor uses the equity method.
-Based on the preceding information,what amount of investment income will be reported by Rotor for the year 2007?

A) $6,500
B) $7,500
C) $7,000
D) $25,000