A company that uses a periodic inventory system had inventory on January 1, year 1, of $450,000. During the first six months of year 1, the company had purchases of $500,000 and sales of $600,000. The company's average markup on cost is 25%. No physical inventory was taken. At what amount should the company value the inventory as of June 30, year 1?

A. $500,000 B. $470,000 C. $450,000 D. $350,000