{"id":2648,"date":"2026-07-31T23:46:55","date_gmt":"2026-07-31T21:46:55","guid":{"rendered":"https:\/\/marcinmalmon.com\/english\/?p=2648"},"modified":"2026-08-01T01:48:19","modified_gmt":"2026-07-31T23:48:19","slug":"equivalent-yield-simulator","status":"publish","type":"post","link":"https:\/\/marcinmalmon.com\/english\/equivalent-yield-simulator\/","title":{"rendered":"Equivalent Yield Simulator"},"content":{"rendered":"
Reading time:<\/span> < 1<\/span> min.<\/span><\/span>\n

Equivalent Yield Simulator<\/h2>\n\n\n\n\n\n\n\n

<\/p>\n\n\n

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\n Notice:<\/strong> This simulator is provided exclusively for educational purposes. It is intended to illustrate the principles of Equivalent Yield<\/em> and does not constitute a professional property valuation tool or a basis for investment decisions.\n <\/div>\n
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Drag the contractual-income bars, any market-income bar, the upper lease-expiry boundary handle and the transaction-price slider. Changing the transaction price does not alter the cash flow.<\/p>\n

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Equivalent Yield<\/div>
\u2014<\/div><\/div>\n
Residual Value<\/div>
\u2014<\/div><\/div>\n
Total Present Value<\/div>
\u2014<\/div><\/div>\n <\/div>\n
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Cash Flow Yield Profile<\/div>\n
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Initial Yield<\/span>\u2014<\/strong><\/div>\n
Reversionary Yield<\/span>\u2014<\/strong><\/div>\n
Equivalent Yield<\/span>\u2014<\/strong><\/div>\n <\/div>\n <\/div>\n
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Transaction Price<\/span>\u2014<\/strong><\/div>\n \n <\/div>\n <\/div>\n
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\n <\/i>Contractual income<\/span>\n <\/i>Market income<\/span>\n <\/i>Lease-expiry handle<\/span>\n <\/div>\n <\/canvas>\n
\u2014<\/div>\n <\/div>\n <\/div>\n <\/div>\n
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Equivalent Yield \u2014 definition<\/h2>\n
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Equivalent yield is a single, averaged and weighted rate of return used in the income approach in growth-implicit<\/em> income capitalisation models, particularly in the term and reversion<\/em> method and in the corresponding implicit cash flow<\/em> projections. The same yield is applied both to the income received during the period of the existing leases (term<\/em>) and to the market income adopted for the reversion following their expiry.<\/p>\n

It may be interpreted as a weighted average of the initial yield<\/em> and the reversionary yield<\/em>, reflecting both the amount and the timing of the individual income streams. The term \u201cweighted average\u201d does not, however, mean a simple arithmetic average of the two yields.<\/p>\n

Equivalent yield is a single rate used both to discount the income arising in the individual years of the analysis period and to capitalise the annual market income in order to determine the residual value. From a mathematical perspective, it corresponds to the internal rate of return (IRR) of the analysed income profile: it is the rate at which the sum of the present values of the property income and the discounted residual value equals the property\u2019s acquisition price.<\/p>\n

The level of the equivalent yield and its position between the initial yield<\/em> and the reversionary yield<\/em> are influenced, in particular, by:<\/p>\n