It is a formula based on the one Ben Graham came up with. I...

It is a formula based on the one Ben Graham came up with. I think, for the record, he did not advocate valuation formulas however, he divised this one on the basis that simplier was better. Take it as a guide as only really works on large stable businesses because you have to make a big assumption around the projected growth rate.

The '7.5' is Graham's opinion on what a company with no growth should be valued at - the earnings multiple.

The '1.5' was the growth multiplier. Original formula is 2 howver, 1.5 is more conservative.

The '10' I used was my assumption on BKL's growth rate over the next 5-7 years. This was based on BKL's previous 10 year growth rate excluding FY16 boom year. Obviously, this is a really subjective number so I provided of scenarios to highlight the big difference in value.

The '4.4' was the AAA bond yield at the time he divised the formula. Factors in interest rates.

The '4' is what I rekon average AAA-AA bond yields are in Australia. Factors in current interests rates into valuation. Correct me if I am wrong here, but it just has to be ballpark.

Higher rates = lower asset prices. Lower rates = higher asset prices.
Current example would be Australian real estate. As rates and yields go down, money flows into risk assets like stocks and real estate to chase yield.

Hope that answers your question.