Here is the official Google PageRank equation. It is calculated by solving an equation of 500 million variables and more than 3.3 billion terms (web pages):
PR(your page) = 0.15 + 0.85 [(PR(page A) / total links (page A) ) + (PR(page B) / total links (page B) ) + …]
Following are a couple of observations to note about the PR equation:
• PR values for based on individual web pages.
• The PR value of each page that links to your site in turn is dependent on the PR of the pages that link to it, and so on backwards.
• A link’s value (amount of PageRank or “voting power” forwarded to the linked to page) is at most only 85% of the linking page’s PageRank value, and this value is diluted (decreased) by the number of other links on that page.
• PR has nothing to do with keywords or text in links – it is purely dependent on link quantity and link strength, as discussed previously.
Some may incorrectly conclude that a link from a page with a PR=4 with only a few outgoing links is worth a more than a link from a page with a PR=7 with 100 outgoing links because for the latter, the “voting power” or value is divided up among 99 other links.
However, you must remember the logarithmic nature of the true PageRank. This means that a link from a PR=6 page that has lots of outbound links may be worth more than a link from a PR=4 page that has only a few outbound links. Whether this is true is dependent on the actual log base used for the PR equation, which is a secret.
Do not get caught up in the minutiae of determining whether a site is worth exchanging links with. Barring link farms, Free-For-All (FFA) sites, sites with a true PR of 0 (which either aren’t indexed or have been “blacklisted” by Google), and sites that have nothing to do with your theme, you should strive to get more links that point to your site – period.
Google performs multiple iterations of the PageRank equation for each page in it’s entire index to determine the new PageRank value each month.