capitalization rate

1. General: Discount (or interest) rate used to determine the present value of a series of future earnings from an investment.

2. Business valuation: Reciprocal of the desired rate of return multiplied by the normalized earnings of a business to arrive at its purchase price.

3. Real estate: Ratio of rental income from a property to its market value, expressed as a percentage. This rate is used in comparing rate of return from a property with the rate of return from alternative investments.