NOI is growing at 3% a year.
Discount rate = 7.25%.
Going-in cap rate = 5.25%.
Terminal cap rate = 6%.
We are told that “income/value growth rate” is constant.
Growth rate = 7.25% - 5.25% = 2%.
Q1: why is NOI growing at 3%?
Q2: if the terminal cap rate is 6%, does that mean that the discount rate has increased to 8%?