Cap rate and COC Returns do you include VAC and Cap Ex as expense

[Stephanie Freed]

I was hoping for some wise input to clarify for me... In my Cap Rate and Cash on Cash return calculations, I am assuming NOT to include the annual $ amount for Vacancy rate and Cap Ex (holdback if you will) in my annual operating expense figure.  Is this correct?  For budgeting purposes I have included 8% Vac rate and 10% Cap Ex but not sure it seems appropriate to use it as expense for the purpose of calculating these.