What is Gordon Growth approximation?
Cap Rate ≈ Required Return − Expected NOI Growth, or (Risk-Free Rate + Risk Premium) − Growth. Shows a cap rate reflects both risk and growth expectations.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.