CAPITALIZATION RATE Definition

Bookmark and Share

CAPITALIZATION RATE, also known as CAP RATE, is the rate of return a property will produce on the owners investment. It is stated as a rate of interest or discount rate used to convert a series of future payments into a single present value. In real estate, the rate includes annual capital recovery in addition to interest.

Learn new Accounting Terms

PAID-IN-CAPITAL is capital received from investors for stock, equal to capital stock plus paid-in capital, NOT that capital received from earnings or donations. Also called contributed capital.

ORDER OF MAGNITUDE is a number assigned to the ratio of two quantities; two quantities are of the same order of magnitude if one is less than 10 times as large as the other; the number of magnitudes that the quantities differ is specified to within a power of 10.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.