An office building property can be purchased for $3.6 million. It is expected to generate annual NOIs of: Yr. 1:$334,250; Yr. 2:$344,275; Yr. 3:$354,600; Yr.4: $365,250; Yr. 5:$376,200; and is expected to be sold resulting in net sale proceeds in Y r. 5 of $3.8 million (i.e., after selling expenses). Assume the project includes a $3.2 million loan having an annual debt service of $275,000 per year. and that the outstanding mortgage balance at the end of the five-year holding periods will be $3.0 million. Assume also that the overall going-in cap rate is 9.0 percent; the going-out cap rate is 9.5 percent; the investor's required return on the project, unleveraged, is 12 percent; and the investor's required return on the project, leveraged, is 18 percent. Using the appropriate information, determine the PRESENT VALUE of the project found by applying the direct capitalization approach. 3,518,421 3,713,889 3,427,100 3.960,000