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
Insurance coverage provided for an individual having a lease at a favorable rate, one which is less than the market value of the property. The insurance indemnifies the tenant for business ...
Window normally mounted on hinges in a window casing. It swings outward to open. ...
Correcting depreciation by making improvements at less cost than the value added. For example, the management of an aging strip shopping center makes a decision to refurbish the windows and ...
(1) Bottom of something used as support. (2) Most essential element. (3) Type of interest rate used when computing compound interest equal to: (1 + I). (4) Justification of an argument or ...
Some states make the legal assumption, based on title theory, that the mortgagee is a partial owner of the real estate securing the mortgage and remains as is until the debt is fully paid. ...
Provision at the end of a document, such as a will, wherein the witnesses sign that the instrument has been executed before them. This may be useful involving transfers of real estate. ...
Something that is inferred, but not explicitly stated. The inference may be deducted from the relevant information. ...
Factors affecting the useability and value of property. Important land features would include whether the land was flat or hilly, cleared or uncleared, high or low elevation, dry or swampy, ...
Expecting or looking forward to something happening. ...
Have a question or comment?
We're here to help.