The expected stream of rental income is capitalized into value by converting expected future cash flows into present value through a process called:

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The process of converting future cash flows into present value is called discounting. This involves adjusting the future cash flows by a discount rate that reflects the time value of money and the risk associated with the investment. The resulting present value represents the capitalized value of the expected stream of rental income. Amortization refers to the process of reducing a debt through regular payments, compounding refers to the process of earning interest on interest, and accounting is the process of recording and reporting financial transactions.

The Expected Stream of Rental Income Is Capitalized into Value