Capitalisation vs DCF - Private Real Estate Investment

CFA Level II Alternative Investments
#1

I am stuck/confused when using the income approach with respect to real estate investment.

The capitalisation rate uses the cap rate to find the value.

Cap rate = discount rate - growth rate

So Value = NOI/Cap rate

Now when it comes to the DCFF the value is NOI / r-g = NOI / cap rate - which results in the same value.

Can someone please elucidate me?

Thank you.

#2

ok got it - its for the terminal value in DCF that we use the cap rate.