Years’ Purchase Calculator
A freehold property earning a net 120,000 a year, capitalised at 8 %, is worth 1500000.
1500000
- Years’ purchase YP
- 12.5
Step-by-step solution
- YP (perpetuity) = 1/i = 1 ÷ 0.08 = 12.5
- Value = net income × YP = 120000 × 12.5 = 1500000
Years’ Purchase Formula
Value = net income × YP
YP = 1/i (perpetual), (1 − (1 + i)^−n)/i (n years), 1/(i + s/((1 + s)ⁿ − 1)) dual rate
Worked Example
A freehold earning a net 1,20,000 a year at 8 %:
- YP (perpetuity) = 1/i = 1 ÷ 0.08 = 12.5
- Value = net income × YP = 120000 × 12.5 = 1500000
GATE tip
Use net income: gross rent minus outgoings such as repairs, taxes, insurance and management.
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Frequently asked questions
Why does a perpetual YP equal 1/i?
An income of I forever has a present value of I/i, so the multiplier is 1/i: 12.5 at 8 %.
When is dual-rate YP used?
For leasehold incomes, where a sinking fund at a lower, safe rate replaces the capital at the end of the lease.
Sources
- The International System of Units (SI), 9th edition (SI Brochure), Bureau International des Poids et Mesures .
Last reviewed: . Factors are stored exactly and computed with 50-digit decimal arithmetic. See how we verify conversion factors.
Cite this page
APA
Scientific Converters. (2026, October 15). Years’ Purchase Calculator. Retrieved October 29, 2026, from https://scientificconverters.com/calculators/years-purchase-calculator/
IEEE
Scientific Converters, "Years’ Purchase Calculator," scientificconverters.com. Accessed: Oct. 29, 2026. [Online]. Available: https://scientificconverters.com/calculators/years-purchase-calculator/