1. What is Capitalized Value?

Capitalized Value is the amount of money whose annual interest at the highest prevailing rate of interest will be equal to the net income from the property.

2. How Does the Calculator Work?

The calculator uses the Capitalized Value formula:

Where:

• \( Cv \) — Capitalized Value
• \( RN \) — Net Rental Income
• \( Y \) — Years Purchase

Explanation: Net Rental Income is calculated by deducting all outgoings from gross rent. Years Purchase in perpetuity is defined as the capital sum required to be invested in order to receive a net annual income of rs/- 1 at a certain rate of interest.

3. Importance of Capitalized Value Calculation

Details: Capitalized Value calculation is crucial for property valuation, investment analysis, and determining the fair market value of income-producing properties.

4. Using the Calculator

Tips: Enter Net Rental Income and Years Purchase values. Both values must be positive numbers for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is Net Rental Income?
A: Net Rental Income is calculated by deducting all outgoings (maintenance, taxes, insurance, etc.) from the gross rent received from the property.

Q2: How is Years Purchase determined?
A: Years Purchase is typically based on the prevailing interest rates and represents the number of years' purchase required to achieve a specific return on investment.

Q3: What factors affect Capitalized Value?
A: Capitalized Value is influenced by net rental income, interest rates, property location, market conditions, and property condition.

Q4: Is this calculation suitable for all property types?
A: This calculation is primarily used for income-producing properties such as rental apartments, commercial buildings, and investment properties.

Q5: How often should Capitalized Value be recalculated?
A: Capitalized Value should be recalculated when there are significant changes in rental income, expenses, or market interest rates.