What does straight-line capitalization indicate about cash flow received during the economic life of an improvement?

Straight-line capitalization refers to a method of valuing income-generating properties by assuming that the cash flow will be consistent over the economic life of an improvement. This approach indicates that cash flows are received in equal amounts throughout the period under consideration.

When a property is assessed using straight-line capitalization, it simplifies the analysis by assuming that the income will remain stable, making it easier to predict future revenues. This is particularly useful for appraisers and investors who are trying to determine the value of a property based on its expected income.

The assumption of equal cash flows helps in creating a straightforward model for valuation, which is widely accepted in real estate transactions and assessments. This methodology conveys a sense of predictability and stability in the income generated from the improvement, thereby facilitating better financial planning and investment decisions.