Suppose you are estimating the value of a shopping center by the income approach. You have determined that the gross rental income will be $240,000 each year and that the operating expenses will equal $35,000 each year. A similar center in the same area recently sold for $2,850,000. You talked with the selling broker and learned that the property was expected to have net income for the year of $175,000 after operating expenses of $27,500. Explain the logic behind the net income capitalization technique and use the technique to calculate the estimated value of the subject property. (Note, use 4 decimal places of accuracy for the cap rate.)

Group of answer choices

4,642,166

3,065,183

3,338,762

3,322,475