Zenith Investment Company is considering the purchase of an office property. Based on current market supply/demand it has estimated NOI will be as follows:
		Year		NOI
		1		1,000,000
		2		1,050,000
		3		1,100,000
		4		1,150,000
		5		1,200,000
		6		1,250,000
		7		1,300,000
		8		1,350,000
Zenith expects that beginning in year 7 and for each year thereafter the NOI will reflect a stable market and grow at 4% annually. Zenith beliefs that an investor should earn 12% return for an investment with this risk profile.
a)	Assuming the investment is expected to produce NOI as shown above and held for seven years and then sold, what is the value of the property today?
b)	What will be the terminal cap rate at the end of year seven?
c)	What will be the going in cap rate based on year 1 NOI?
d)	What explains the difference between the "going-in" cap rate and the terminal cap rate?