A Conceptual Look Relevant Rates of return Ko E an overall capitalization rate for the firm Net operating income Total market value of the firm Assumptions: VEB+S=total market value of the firm o=1+E=net operating income interest paid plus earnings available to common shareholders 17-617-6 O V A Conceptual Look -- Relevant Rates of Return = = ko = an overall capitalization rate for the firm Net operating income Total market value of the firm ko Assumptions: • V = B + S = total market value of the firm • O = I + E = net operating income = interest paid plus earnings available to common shareholders