Derived Investment Value (DIV) is a method one can use to calculate the net present value of liquidated assets.
Huh?
The present value is calculating today’s costs as well as the costs in the future, but discounted either by inflation and/or interest rates.
For instance, Grandma’s complaining how her cold cream used to cost $0.50 and now costs $5.00 is an example of how inflation changes buying power. If she thought she could save $0.50 cents for years and it would still pay for that cold cream, it's because she didn’t calculate the present value, discounting for inflation. Silly Grandma. If only she invested that money instead of keeping it under her mattress...
We say “net” present value because we’re subtracting out the costs of liquidation. Which means we should just be left with what we can pocket (or if it’s negative, the total loss, including costs of liquidation).
DIV became a thing when big banks super-messed-up in the 80s and 90s, causing a governmental organization to have to come up with a way to sort through the mess of assets that they needed to liquidate to set everything right.
Aren’t you glad you weren’t in charge of that mess?
Related or Semi-related Video
Finance: What is Assessed Value?6 Views
finance a la shmoop what is assessed value well here's ass value, here's asset value.. [Ass eating grass and a house for sale]
that is if you own a home, there really two prices attached to it..
The price you pay for it, or can sell it for, that's the market value of your asset, your
home, and what your home is officially worth according to the government, well that's the assessed value..
the government assessed that your home was in fact worth $412,932
why two sets of house prices well to
keep things you know interesting and to get you to pay your taxes your state [Uncle Sam walks in on man in office]
charges you property tax just for the privilege of living in the state they
charge more for the guy living in the McMansion than they do for the guy
living in the one bedroom bungalow usually but they still need to figure [Large mansion and small bungalow]
out who pays what each state has a little different taxation system and some
states use a formula based on what you paid for the house or what your house is
accessed or perceived value is in California for example you pony up one
point two five percent of the purchase price the price you paid for your home
within some subsequent adjustments for inflation over time that's the rate pay [Inflation chart over time]
based on the purchase price the market price in other states the value of the
house carries an assessed value that is an assessor takes a look at your home
every so often and comes up with a dollar figure of what they guess the [Assessor person beside the assessed property]
house is well officially worth for tax purposes usually that number is lower
than what you actually paid for your house or what it would get if you would
sell it in the marketplace you know if you whine loud enough the assessor may
make an adjustment so that for at least that year your tax bill can come down [Man celebrates with assessor]
yeah whining about taxes it can have its benefits people and all that whining
yeah it'll make you feel like one of these guys
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