Please explain the exercise step by step and don't handwrite the answer. Thank you.

E2-8 Calculate investment balance four years after acquisition Pam Corporation owns a 40 percent interest in the outstanding common stock of Sun Corporation, having acquired its interest for $2,400,000 on January 1, 2016, when Suns stockholders equity was $4,000,000. The fair value/book value differential was assigned to inventories that were undervalued by $100,000 and sold in 2016, to equipment with a four-year remaining life that was undervalued by $200,000, and to goodwill for the remainder. The balance of Suns stockholders equity at December 31, 2019, is $5,500,000, and all changes therein are the result of income earned and dividends paid.

REQuIRED:

Determine the balance of Pams investment in Sun at December 31, 2019.