cap rate

Definitions (2)

1. The discount rate used to determine the present value of a stream of future earnings. Typically this will be an appropriate risk-free return plus a premium to reflect the risk of that specific investment.

Use cap rate in a sentence

We used the cap rate and we used it in order to determine present value as well as future earnings too.

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You should try to figure out what a good cap rate would be that is both fair to you and to everyone that is involved.

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When my boss was considering buying bonds issued by our competitor, he asked me to analyze the value of future payments by comparing them to the cap rate to see what they were worth today.

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cap and collar capacity