The cap rate is NOI for next year divided by the current value. Since the asking price for both properties is same, higher NOI for Green Oaks hotel would have to have a higher cap rate. Net operating income is not calculated using the debt service. The amount owed at the end of a loan is determined by the interest rate, term of the loan and the amount borrowed. The discount rate is the sum of the cap rate and growth rate. The growth rate is not determined by the amount owed at the end of a loan period |
