Question: 10:19Why does our financial model include two inputs for cap rate - market cap rate and test cap rate? Select ALL that apply.Having two inputs

10:19Why does our financial model include two inputs for cap rate - market cap rate and test cap rate? Select ALL that apply.Having two inputs for market cap rate and test cap rate allows us to show the client how much better the bank's rate is compared to the market cap rate.The test cap rate is usually set slightly higher than the market cap rate to show us a more conservative scenario when evaluating the property.Macroeconomic conditions and market factors can cause cap rate compression. The test cap rate sensitizes for these factors, allowing us to see a valuation under normal conditions.exams.corporatefinanceinstitute.com

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