Quality Living is a real estate investment companies that builds and renovates apartment buildings in inner city Melbourne. It is currently considering the renovation of a few idle buildings that it owns in Port Melbourne into luxury apartment buildings. The company bought those buildings 8 months ago for $1.5 million and the current market value is $1.8 million. The cost of the renovation is estimated at $2.7 million. Quality Building expects an income of S5million from the sales of the renovated luxury apartments. 1. How should the S1.5 million purchase cost of the building be treated in evaluating the project? How should the $1.8 million market value be treated? 2