How to Calculate Ibbotson Chen Earnings Model?
Ibbotson Chen Earnings Model calculator uses Equity Risk Premium = ((1+(Expected Inflation*0.01))*(1+(Expected Real Growth in EPS*0.01))*(1+(Expected Changes in PE Ratio*0.01))-1+(Expected Yield on Index*0.01)-(Expected Risk Free Rate*0.01))*100 to calculate the Equity Risk Premium, The Ibbotson Chen Earnings Model is a macroeconomic model for the Equity Risk Premium (ERP). Equity Risk Premium is denoted by ERP symbol.
How to calculate Ibbotson Chen Earnings Model using this online calculator? To use this online calculator for Ibbotson Chen Earnings Model, enter Expected Inflation (I), Expected Real Growth in EPS (rEg), Expected Changes in PE Ratio (Peg), Expected Yield on Index (Y) & Expected Risk Free Rate (RF) and hit the calculate button. Here is how the Ibbotson Chen Earnings Model calculation can be explained with given input values -> 10.8124 = ((1+(2*0.01))*(1+(8*0.01))*(1+(1.5*0.01))-1+(6*0.01)-(7*0.01))*100.