What is Capital Appreciation?
Capital appreciation is the increase in an investment's value over time, leading to potential profits for investors when they sell it at a higher price than the purchase cost.
by Sai V
Updated Oct 20, 2023
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What is Capital Appreciation?
Capital appreciation signifies the growth in an investment's market value, measured as the difference between the purchase price and the eventual selling price. It represents the potential profit earned when the investment appreciates in value over time. Investors aim for capital appreciation to increase their overall wealth.
What is the Formula for Capital Appreciation?
The formula for capital appreciation is:
Capital Appreciation = Current Value – Purchase Price.
In this formula, the current value represents the current market value of the asset, and the purchase price is the cost incurred to acquire the asset. Capital appreciation indicates the increase in an asset's value over time, calculated by subtracting the purchase price from the current market value.
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