The Capitalization Rate Calculator is used to calculate the capitalization rate.
The capitalization rate, also known as cap rate, is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or alternatively its current market value. It is used to estimate the investor’s potential return on his or her investment.
The capitalization rate calculation formula is as follows:
Capitalization rate = Annual net operating income / Cost (or value)