Derived Investment Value (DIV)

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?