How do cap rate, NOI, and property value relate — and which way does value move when cap rates rise?

How to answer

Cap rate = NOI / Value, so Value = NOI / Cap rate. The relationship is inverse: a higher cap rate means a lower value. So when rates and cap rates rise, values fall (and vice versa). Conceptually, cap rate ≈ risk-free rate + risk premium − expected NOI growth.

Key idea: Value = NOI / cap; higher cap = lower value.