Assume you have been hired to appraise a local hospital. Your best estimate of the reproduction (or replacement) cost of the building is $3, 700,000. However, upon evaluating the use of land in the local area, you have deemed the value of the site to be worth an additional $800,000. If the building has deprecated by $500,000 over its lifetime and there are no further depreciation losses due to external or functional obsolescence, what is the indicated value of the hospital using the cost approach?
A. $2, 400,000
B. $3, 700,000
C. $4,000,000
D. $4, 500,000