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Capitalisation Rate Formula

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Capitalisation Rate is a measure used to evaluate the potential return on a real estate investment. Check FAQs

r cap = (\frac{NOI}{CMV}) \cdot 100

r_cap - Capitalisation Rate?NOI - Net Operating Income?CMV - Current Market Value?

Capitalisation Rate Example

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Here is how the Capitalisation Rate equation looks like with Values.

Here is how the Capitalisation Rate equation looks like with Units.

Here is how the Capitalisation Rate equation looks like.

12.9348 = (\frac{59500}{460000}) \cdot 100

12.9348 = (\frac{59500}{460000}) \cdot 100

12.9348 = (\frac{59500}{460000}) \cdot 100

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Important Formulas of Mortgage and Real Estate » fx Capitalisation Rate

Capitalisation Rate Solution

Follow our step by step solution on how to calculate Capitalisation Rate?

FIRST Step Consider the formula

r cap = (\frac{NOI}{CMV}) \cdot 100

Next Step Substitute values of Variables

∴

r cap = (\frac{59500}{460000}) \cdot 100

Next Step Prepare to Evaluate

∴

r cap = (\frac{59500}{460000}) \cdot 100

Next Step Evaluate

∴

r cap = 12.9347826086957

LAST Step Rounding Answer

∴

r cap = 12.9348

Capitalisation Rate Formula Elements

Variables

Capitalisation Rate

Capitalisation Rate is a measure used to evaluate the potential return on a real estate investment.

Symbol: r_cap

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Capitalisation Rate

Net Operating Income

Net Operating Income is the total revenue generated from a property minus operating expenses but excluding debt service and income taxes.

Symbol: NOI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Operating Income

Current Market Value

Current Market Value refers to the estimated worth of an asset or property based on its perceived value in the current market conditions.

Symbol: CMV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Current Market Value

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How to Evaluate Capitalisation Rate?

Capitalisation Rate evaluator uses Capitalisation Rate = (Net Operating Income/Current Market Value)*100 to evaluate the Capitalisation Rate, The Capitalisation Rate is a measure used to evaluate the potential return on a real estate investment, calculated by dividing the property's net operating income (NOI) by its current market value or acquisition cost. Capitalisation Rate is denoted by r_cap symbol.

How to evaluate Capitalisation Rate using this online evaluator? To use this online evaluator for Capitalisation Rate, enter Net Operating Income (NOI) & Current Market Value (CMV) and hit the calculate button.

FAQs on Capitalisation Rate

What is the formula to find Capitalisation Rate?

The formula of Capitalisation Rate is expressed as Capitalisation Rate = (Net Operating Income/Current Market Value)*100. Here is an example- 12.93478 = (59500/460000)*100.

How to calculate Capitalisation Rate?

With Net Operating Income (NOI) & Current Market Value (CMV) we can find Capitalisation Rate using the formula - Capitalisation Rate = (Net Operating Income/Current Market Value)*100.

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Capitalisation Rate Formula

Capitalisation Rate Example

Capitalisation Rate Solution

Capitalisation Rate Formula Elements

Other formulas in Important Formulas of Mortgage and Real Estate category

How to Evaluate Capitalisation Rate?

FAQs on Capitalisation Rate

Variable Name