Capitalization Rate (Cap Rate)

Last Updated: October 31, 2019

A rate of return of a rental vehicle based on comparing the yearly net operating income (NOI) to the purchase price or market value.

Since the cap rate does not take into account loan payments, it can be used to compare rental vehicles irrespective of financing terms.

Using Purchase Price:

Cap Rate = Yearly NOI / Purchase Price

Using Market Value:

Cap Rate = Yearly NOI / Market Value

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