"Capitalization rate" (or "cap rate") is used when appraising a property using the "income approach," not the "replacement cost method." The "replacement cost method" is one way to determine the value of a property using the "cost approach."
These are questions that the above text answers:
1. What is the purpose of using the capitalization rate in property appraisal?
2. In what method of property appraisal is the capitalization rate used?
3. What is the replacement cost method used for in property appraisal?
4. What is another name for the capitalization rate?
5. What is the income approach in property appraisal?
6. What is the cost approach in property appraisal?
7. How is the value of a property determined using the replacement cost method?
8. Can the capitalization rate be used in the cost approach method of property appraisal?
9. What is the role of the capitalization rate in property appraisal?