In the capitalization formula, income divided by rate equals:

In the capitalization formula, income divided by rate indeed results in the property's value. This is a fundamental concept in real estate appraisal and investment analysis, often used to determine the worth of an income-producing property.

When considering an investment, the capitalization rate (often expressed as a percentage) reflects the expected rate of return on an investment property, calculated based on its net operating income (NOI). By taking the income generated by the property and dividing it by the capitalization rate, one arrives at an estimate of the property's value. This is because the formula essentially answers the question: how much is an investor willing to pay for a property to achieve a desired return based on the income it produces?

In practice, this means that if a property generates a certain level of income, investors can use this capitalization approach to assess its value in the market. This method is particularly useful when comparing similar properties or assessing the potential purchase price of investment real estate.