Enter the recovery rate and the book value of an asset into the calculator to determine the estimated recovery value (ERV).

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## ERV Formula

The following formula is used to evaluate the estimated recovery value.

ERV = RR * BV

- Where ERV is the estimated recovery value
- RR is the rovery rate (%)
- BV is the book value ($)

## ERV Definition

**What is ERV? **

ERV, short for estimated recovery value, is a metric used to describe the total amount of value a company could extract from another asset that is undergoing a liquidation event such as a company going bankrupt.

The book value is also considered the net present value of an asset and a recovery rate is a percentage of an asset that can be recovered during the liquidation event.

## Example Problem

How to calculate ERV?

**First, determine the book value of the asset or company.**For this example, we will look at a single asset to make the calculation simple. In this case, the book value of the asset is found to be $40,000.00.

**Next, determine the recovery rate.**During a liquidation event, the recovery rate of this asset is expected to be 85% because it can be sold on the open market.

**Finally, calculate the estimated recovery value.**Using the formula above, the ERV is calculated to be:

ERV = RR * BV

ERV = .85 * $40,000

ERV = $35,000.00.