Capitalization rate (Market Capitalization rate)

Capitalization rate = R₀ = Discount rate - Growth rate = r - g

MV₀ = NOI/(r-g) = NOI/R₀
R₀ = NOI/MV₀
r = R₀ + g

Capitalization rate

Property type	Net operating income (NOI)	Growth rate(g)	Property value(MV0)	Capitalization rate(R0)	Discount rate(r)
Office building	$600,000	3%	$8,000,000	7.5% (*1)	7.5%+3% = 10.5%
Warehouse	$600,000	5%	$10,000,000	6% (*2)	6%+5% = 11%
Hotel	$900,000	7%	$9,000,000	10% (*3)	10%+7% = 17%

(*1) $600,000/$8,000,000 = 7.5%
(*2) $600,000/$10,000,000 = 6%
(*3) $900,000/$9,000,000 = 10%