Q$1.$ Answer the following question, showing detailed calculations:

A private company has reported net income of $$2,000,000,$ after charging depreciation of $$300,000$ and interest expense of $$400,000.$ A potential acquirer is analyzing the company and has noted that operating expenses include $$400,000$ compensation for the chief executive $($who is the controlling shareholder of the company$)$ whereas the acquirer believes that a more appropriate figure in line with the company$$ size and operations is $$500,000.$ In addition, he notes that the company owns an apartment block which generates rental income of $$200,000$ and has total cash costs of $$120,000.$ The company$$s working capital increases over the year by $$200,000$ and capital expenditure was $$350,000.$ The tax rate is $30\%.$ The free cash flow to the firm most appropriate for use in valuing the company is closest to:

a$.$ $$1,904,000$

b$.$ $$2,156,000$

c$.$ $$2,210,000$