What is CAP?

, also known as the rate of capitalization, is the CAP discount rate that is used to determine the current or current value of the accumulated assets that create future earnings. The Ste Křesová rate is usually calculated in a net income, which is used both in a project of income for business for a certain period of time and assessing the return rate of the mortgage. The CAP rate is generally determined by the division of net operating income associated with the company with a market value, which is hundreds of hundred.

Calculation of the current CAP rate is an excellent means to ensure that an enterprise or investment in fact continues to bring return. The best circumstances are the hope that the ceiling rate will show a relatively return without risk and possibly a bonus over time. However, the CAP rate can also be used as an indicator that the investment has some potential problems. If the ceiling rate does not prove the rate of return on the Jeinvestor, which is considered to be fair, may decide to pass the investment andlook for another opportunity.

Business can also benefit from calculating CAP rates. If the CAP rate does not mean strong performance, the owners and managers of the corporation can explore the relevant factors. This can lead to important changes that can help the corporation improve the lower limit and thus affect clean operational income. Improved performance will also help the company's total market value.

As a simple ratio used to create an estimate of the value of the income entities, the CAP rate is valuable as a means of helping the company to improve the lower limit. At the same time, the ceiling rate serves as an excellent source of information for the investor, which allows you to identify opportunities that carry a lower risk for capital investment.