Marshall's & Co

Multiple Choice

Marshall's & Co. purchased a corner lot in Montreal five years ago at a cost of $640,000. The lot was recently appraised at $810,000. At the time of the purchase, the company spent $50,000 to grade the lot and another $4,000 to build a small building on the lot to house a parking lot attendant who has overseen the use of the lot for daily commuter parking. The company now wants to build a new retail store on the site. The building cost is estimated at $1.2 million. What amount should be used as the initial cash flow for this building project?

A) $1,200,000
B) $1,840,000
C) $1,890,000
D) $2,010,000
E) $2,060,000