At the beginning of 2015, Midway Hardware has an inventory of $490,000. Because sales growth was strong during 2015, the owner wants to increase inventory on hand to $530,000 at December 31, 2015. If net sales for 2015 are expected to be $2,220,000, and the gross profit rate is expected to be 25%, compute the cost of the merchandise the owner should expect to purchase during 2015.

$2,195,000.

$1,665,000.

$1,705,000.

$2,220,000.