Final answer:
The capitalization rate (income capitalization) formula is used to determine the value of an income-producing property.
Step-by-step explanation:
Capitalization rate (income capitalization) is a formula used in business and finance to determine the value of an income-producing property. It is calculated by dividing the net operating income (NOI) of the property by its current market value. The formula is:
Capitalization rate = Net Operating Income / Current Market Value
For example, if a property has a net operating income of $100,000 and a market value of $1,000,000, the capitalization rate would be 10%.