Residual Income Valuation

Residual income valuation (RIV) which is also known as residual income method or residual earnings model is a technique for or method involving equity valuation which properly accounts for the expense of equity capital. The word ‘residual’ refers to almost any possibility prices excessively and that is measured as compared with the actual guide benefit from the investors fairness as well as the earnings that agency builds after human resources for your legitimate price tag involving funds is actually then your recurring earnings. This approach is basically exactly like the MVA/EVA primarily based strategy possessing related benefits and reason.