Ground rent is the revenue generated by leasing out a piece of land. It is considered ordinary income for tax purposes but can be reclassified in some circumstances.
In capital budgeting, the payback period estimates the time required to recover the initial investment from cash inflows generated by the project. The major limitation of this method is that it does not consider cash flows after the payback period and, thus, it's not a reliable measure of the overall profitability of an investment.
In appraisal terminology, the recapture rate is the rate of recovery of an investment in a wasting asset. This rate is added to the discount rate to derive a capitalization rate.
Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.