For non-Flip and non-Back of the Envelope analyses, Valuate will autocalculate 11 years' worth of cash flows upon a file being created, regardless of the Holding Period that you select.

The Year 1 Cap Rate (**boxed in green** in the Home screen snapshot below) is calculated off of the user's inputs for the Purchase Price and for the components of Year 1 NOI, based on this formula: Cap Rate = NOI / Purchase Price.

The Year 2+ Sale Cap Rates **boxed in blue** in the Unlevered Summary table are calculated by adding a **0.25%** increment to the prior year's Cap Rate. To change any of the values for Year 2 through Sale Year-1, double click on the input field for the desired year and input a new value. Note that changing any one year will not cause a ripple effect in the subsequent year values i.e., the subsequent year values will not recalculate upon editing any year.

The Sale Year Cap Rate **boxed in orange **is initially set to be 0.25% higher than that for the year prior to the year of sale. The Forward Year Cap Rate is always set to be equal to the Sale Year Cap Rate.

**For example,** if you create a new file that has a Year 1 Cap Rate of 8.00% (**boxed in green** below), the subsequent year cap rates will autocalculate upon file creation to be as shown **boxed in blue** below

- Year 2 - 8.25%
- Year 3 - 8.50%
- Year 4 - 8.75%
- Year 5 - 9.00%
- Year 6 - 9.25%
- Year 7 - 9.50%
- Year 8 - 9.75%
- Year 9 - 10.00%

The default value in this example for the Sale Cap Rate, which is **boxed in orange**, (Year 10 since the Holding period in the Sale box is set to 10 years) will be 10.25%, a continuation of the constant 0.25% incremental growth trend of the cap rate year over year.

Note that the Sale year Cap Rate and the Forward Year Cap Year (Sale Year+1; Year 11 in this example) are equal to one another by design. To change both at once, edit the Sale Cap Rate field in the Sale box.

**What happens when you change the Holding Period?**

If you change the Holding Period input, the Cap Rates at the point of changing the Holding Period will remain as is in the new presentation of the analysis.

**For example,** if you were to change the above-shown analysis from a Holding Period of 10 years to 5 years, the Cap Rates will remain the same for the years that will still be displayed.

If you then revert the Holding Period from 5 years back to 10 years, the Cap Rates for the full 11 years that were in place when the Holding Period was shortened will be restored.

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Note: If a file is created for which all values related to the Year 1 NOI are zero, the Cap Rates will initially be set to be:

Year 1 - 0.00%

Year 2 - 0.25%

Year 3 - 0.50%

Year 4 - 0.75%

Year 5 - 1.00%

Year 6 - 1.25%

Year 7 - 1.50%

Year 8 - 1.75%

Year 9 - 2.00%

Year 10 - 2.25%

Year 11 - 2.25%

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