What the Residual Income Valuation Calculator is for
Add current book value to discounted forecast residual income and an entered terminal residual-income value.
It makes the prices, cash flows, rates, time periods, weights, and model conventions explicit so you can inspect an entered scenario without hidden live-market assumptions.
Calculation structure
Follow the stated model and units
Equity value = book value + Σ[RI_t/(1+r)^t] + terminal value/(1+r)^n.
Visual explanation
See how the inputs become the result
Capital and cash flowstime and rate→entered modelScenario resultChanging one assumption changes the model—not the marketEquity value = book value + Σ[RI_t/(1+r)^t] + terminal value/(1+r)^n.
Read the estimate correctly
Use the result within its boundaries
Book value 100 plus annual residual-income forecasts and a terminal value are discounted at the entered required return.
Residual-income rows must already reflect earnings minus the required charge on beginning equity; the calculator does not derive that accounting measure.
Quick guide
How to use this calculator
Enter the cash flows, values, rates, timing, or portfolio assumptions named in the fields.
Use one consistent period and currency convention throughout the scenario.
Read the calculator-specific model limits before interpreting the result.
Calculation method
Calculation method
Equity value = book value + Σ[RI_t/(1+r)^t] + terminal value/(1+r)^n.
Model, simulation, root, square-root, and compounding outputs are estimates and are visibly marked approximate.
Worked example
Worked example
Book value 100 plus annual residual-income forecasts and a terminal value are discounted at the entered required return.
Equity value = book value + Σ[RI_t/(1+r)^t] + terminal value/(1+r)^n.
Supported inputs
Precision and limits
Visible input limits
Inputs support up to 12 decimal places and lists support at most 1,200 rows. Iteration and simulation bounds are displayed in their fields.
International scope
No exchange, tax system, reporting standard, currency, fund rule, trading calendar, or market convention is selected automatically.
Decision boundary
Outputs are entered scenarios, not valuations, forecasts, risk limits, executable trades, suitability decisions, or recommendations.
Calculator-specific assumptions
Residual-income rows must already reflect earnings minus the required charge on beginning equity; the calculator does not derive that accounting measure.
