The wider the capitalization or "cap" rate i.e., the discount rate minus the growth rate in the terminal period), the higher the terminal value.

Name: The wider the capitalization or "cap" rate i.e., the discount rate minus the growth rate in the terminal period), the higher the terminal value.
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A wider capitalization rate (higher discount rate or lower growth rate) results in a lower terminal value, as it increases the denominator in the terminal value formula, reducing the overall value.

The Wider the Capitalization or "Cap" Rate I