Capitalization rate

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The capitalization interest rate is a compound interest rate made up of the base rate (not to be confused with the base rate regulated in the German Civil Code ) and the risk surcharge . In principle, both are to be determined by comparing opportunity costs, so they should reflect the return on alternative investments.

The base rate indicates the return on a risk-free alternative investment, while the risk premium indicates the difference between the higher average return that can be achieved with a risky investment and the base rate.

literature

• Bark, Christina. The capitalization rate in the company valuation. Springer Fachmedien, 2011.
• Dörschell, Andreas, Lars Franken, and Jörn Schulte. The capitalization interest rate in the company valuation: practical derivation using capital market data. IDW-Verlag, 2009.
• Metz, Volker. The capitalization rate in the company valuation. Springer Fachmedien, 2007.
• Munkert, Michael J. The capitalization rate in company valuation. Duv, 2005.
• Siepe, Günter. "Capitalization Rate and Company Valuation." The auditing 7.1998 (1998): 325-338.