Benjamin Graham's original 1962 formula compared a stock's earnings power to the safest available bond yield of the day — the idea being that stocks need to earn more than a risk-free bond to be worth the extra risk.
How it's used. The formula multiplies your P/E-equivalent value by 4.4 / Y, where 4.4 is the average AAA yield from Graham's own era and Y is today's AAA yield. When today's yields are higher than 4.4%, this term shrinks the resulting valuation — reflecting that stocks become relatively less attractive as safe bonds pay more.
Default: 5.0%. This is a broad market rate, not something specific to the company you're valuing — feel free to update it to whatever the current AAA corporate yield actually is.