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

## ERV Formula

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

ERV = RR /100* BV
• Where ERV is the estimated recovery value
• RR is the recovery rate (%)
• BV is the book value ($) To calculate the estimated recovery value, multiply the recovery rate by 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? 1. 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.

2. 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.

3. 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.