Cost Of Capital
Definition of "Cost of capital"
Rate of return that is necessary to maintain market value of a real estate project. The cost of capital is used for project evaluation purposes. Under the net present value method, the cost of capital is used as the discount rate to calculate the present value of future cash inflows derived from the real estate project. Under the internal rate or return method, it is used to make an accept-or-reject decision by comparing the cost of capital with the internal rate of return on a given project. A project is accepted when the internal rate exceeds the cost of capital. see also hurdle rate; cutoff rate; minimum required rate of return.
Popular Real Estate Terms
One of the most recurring real estate doubts is regarding what is a broker in comparison to what is a real estate agent. Well, it depends from state to state to tell exactly what a Broker ...
Action that is beyond that allowed legally. Examples are charging illegally high interest rate on mortgages and real estate exceeding the amount permissible by legal statute, and a real ...
Heated structure needed to raise fowl. ...
Said of property that is bought subject to the existing loan against it. ...
The definition of trade-in in real estate refers to a swap of houses. The trade-in program gives a seller of a property the chance to find an ideal replacement home for their family while ...
Warming method using sunlight. It involves special glass panels. ...
Privilege of a real estate investor or lender to participate in the profitability generated from property. This is in addition to any principal, interest, or dividends. ...
Financial institution that channels the savings of its depositors mostly into mortgage and home improvement loans. It concentrates on originating , servicing, and holding mortgage loans. ...
Designation given to members of the American Society of Real Estate Counselors (ASREC). A prerequisite for membership is professional experience and ethical conduct. ...
Have a question or comment?
We're here to help.