Question

If the capitalization rate for valuation is 13% and the projected income is expected to increase at a rate of 4% over time, what is the discount rate for valuation over multiple years?

Answer 1

The discount rate for valuation over multiple years is calculated by adding the capitalization rate to the projected income growth rate.

Step-by-step explanation:

The discount rate for valuation over multiple years is calculated by considering the capitalization rate and the projected income growth rate. To determine the discount rate, we need to add the capitalization rate to the projected income growth rate.

Discount rate = Capitalization rate + Projected income growth rate

Using the given values, the discount rate for valuation over multiple years would be:

Discount rate = 13% + 4% = 17%