The Traverse Bay Restaurant Company owns a piece of land that it could sell today (net of taxes) for $500,000. Last year, it commissioned a consulting com- pany to recommend the most suitable type of restaurant for the site. The con- sulting firm recommended a nautical theme, casual dining restaurant with an outdoor cafe. Pleased with the analysis, Traverse Bay paid the firm a $40,000 consulting fee last year. The managers have now decided to proceed with building the restaurant. They estimate that it will cost $1,500,000 to construct and equip. In addition, the managers project that the new restaurant will im- mediately need $150,000 in net working capital.

Required:

Calculate the total initial investment cash flows (including any opportunity costs) that should be attributed to the investment in the restaurant.