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dividing the Net Operating Income by an overall capitalization rate to estimate value. Contrast with yield capitalization .
Example: Table 17.
| TABLE 17 DIRECT CAPITALIZATION |
|
| Gross income | $100,000 |
| Operating expenses | - 40,000 |
| Net operating income |
$ 60,000 |
| Capitalization rate | ÷ 0.12 |
| Value estimate | $500,000 |

