That calculation assumes that the risk-free rate is 5%, and that you will get $1 per year forever (i.e., considering the company to be an annuity that pays $1 p

That calculation assumes that the risk-free rate is 5%, and that you will get $1 per year forever (i.e., considering the company to be an annuity that pays $1 per year forever). A more general formula is: Value = (Annual revenue) / (interest rate - growth rate) The interest rate here is the interest rate that takes into account how risky your business is--the rate you'd be able to borrow at, the "cost of capital". Let's say you could get a loan (secured only by the assets of the business) at 15% interest, and that you expect to grow by 5% per year. Then per $1 of annual revenue: Value = $1 / (.15 - .05) = $1 / (.1) = $10