Concept: Capitalised value is the amount of a money whose annual interest at the highest prevailing rate of interest will be equal to the net income from the property. In mathematical form it is represented as: Capitalised value = Net annual income × Year’s Purchase Year’s Purchase =
100
i
i = rate of interest = 9% Year’s Purchase =
100
9
=11.11 Net annual income = Rs. 3000 ∴ Capitalised value =3000×