You are a senior analyst underwriting the acquisition of a $100 million office building in San Francisco. The following data is available; average cap rate of competing buildings is 7%, the price per sq. ft. of competing buildings is $600, the risk premium for this type of property is 7.5%, the loan will be at 70% LTV, with interest at 5% and 30 yr. amortization, the Ten-Year TNote is 3.0% and the gross rents of the building are expected to grow 2.5% per year. What is the formula capitalization rate and discount rate of the acquisition?

(A) 8% and 10.5%

(B) 10.5% and 8%

(C) 7% and 10%

(D) 10% and 7%