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
When you hear a real estate agent talking about a client that's an empty nester, it means said client suffers from empty nest syndrome. But what is Empty nest syndrome? Empty nest ...
Building more than six stories high serviced by elevators. ...
Land subject to an easement. ...
Housing where affirmative action is actively pursued encouraging people of all races, nationalities, and religions to purchase or rent the facilities. ...
Land parcel bounded by two intersecting roadways. ...
The definition of voluntary alienation in real estate is the transfer of the residency rights or deed of a property between two parties without the use of extraneous legal measures. Unlike ...
A loan whereby the lender, in the event of a default, has recourse beyond the collateral pledged to initially secure it. For example, John gave Brian a $50,000 recourse loan using Brian's ...
The definition of net sales price in real estate is the combined total cost to the buyer of a listing, excluding any auxiliary costs such as the sales fee, appraisal fee, real estate agent ...
When someone owns a house that is an abutting property, it means that the property is sharing a boundary with the property next to it. The two abutting properties are adjoining properties ...
Have a question or comment?
We're here to help.