CAPITALIZATION RATE Definition

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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.

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APPLICATION RATE is the quantity (mass, volume or thickness) of material applied per unit area.

BENEFIT PERIOD is the projected useful life time period over which an asset will be productive.

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