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Richard Lowe
I think it's the real PR of the page. The amount of 'transfered' PR your linked page gets however, depends on the number of links on that linking page. If the real PR of the linking page is 7, and there are about 20 links (to internal + external pages) on it, the transfered PR should be around 5.6. If there are about 100 links on it, the transfered PR shoudl be around 4.9.
Perhaps a good call for subdomains....and why people use them :) More tips of the pyramid to funnel PR into sorta thing from the recips and "extra" listings they can squeeze
The most comfortable fit for my experience thus far is about base 15 with about 0.91 decay factor, but the margins of error may be huge.
If the Toolbar log scale base is 3, then we should expect a much quicker reduction of PageRank when following links from pages with more than 3 links (currently I think about 1/2.5 notch on the Toolbar for a link from page with 3 links).
Regarding the log base, I wouldn't care too much. I simulated different log bases. Nearly everybody seems to agree that it's probably between 7 and 10. But the net differences between both are minimal.
PageRank of linking page: 7
Number of links: 20
PR passed to each link with Log base 10:5.6
PR passed to each link with Log base 7 :5.35
PageRank of linking page: 7
Number of links: 100
PR passed to each link with Log base 10:4.9
PR passed to each link with Log base 7 :4.52
I make my own calculations based on the worst case: log base 7, but feel free to pick the one that you prefer. I am more interested in the relative evolution as the number of links gets higher, than the absolute value. The PR value passed to each decreases sharply with the number of links in the beginning, but CIML is absolutely right: once above the 20 links (which is the average number of links on web pages), the decrease is minimal. So don't let that stop you linking externally!
CIML, thank you for filling in the formula! ;-)