PK Properties Purchased a Warehouse for $1

PK Properties purchased a warehouse for $1.6 million ten years ago. Four years ago, the company repaired the roof at a cost of $220,001. Last year, the electrical wiring and lights were upgraded at a
Cost of $134,001. The annual taxes on the property are $28,500 and the rental income is $170,001.
The warehouse has a current book value of $800,000 and a market value of $1.95 million. The
Property is totally debt-free. PK is considering converting the building into a discount retailer of bulk
Goods. The cost of the conversion would be $95,000 and could be started next month when the
Existing lease on the building expires. When analyzing the bulk goods option, what value should PK
Assign as the initial cost of the project? (Answer in dollars)

A) $95,000
B) $895,000
C) $1,249,000
D) $2,045,000
E) $2,215,000