What is Enterprise Value? How to calculate it?

I have to say Modern Financial theories are in quandry. I recently read a book by Prof.Stephen Ross, it starts with "no arbitrage" states a pre-condition for "efficient markets". He starts with an Investment that don't add value in the next period of time which I believe is not correct assumption. There are others like more relience on the sigma the standard deviation and normal bell curves which I believe can be used only for generaly predictable phenomenon, which they use very frivelosly in everything which are unpredictable. Another one is Black and Scholes pricing formula which depends on modern finance theories along with the use of sigma again and bell curve, where one of the assumption is that each time series data is not interrelated and efficient market stipulation which B&S takes as an assumption, in which case bell curve cannot be used one can use only Poisson curve where the time series data is not inter related, one not influencing the other. So I even believe a new modern fiance theory should emerge based on Poisson Distribution before we can come to ably value Enterprises.

I don't know what enterprise value is, but what they use abroad in US is the Economic value which is the present value of future projected cash flow for say 5 years..
It is as follows, If P is the cash flow for this year and "g" is the growth rate, k the return on investment, then the economic value of the company is = P/(i+k)+P(1+g)/(1+k)^2+P(1+g)^3/(1+g)^3+ ......+P(1+g)^5/(1+k)^5.
This will be the price of the company.
If one is looking at the "replacement value) then it is the current cost of the physical assets. 
In Mergers and Acqwuistions they calculate the market value similarly as the above using dividend discount model where instead of cash flow they use dividend "d" and also use the termianl value of the stock at the end of five years which is d(1+g)^5/(Ks-g) where Ks is the return on equity. Unlike cash flow model here they use return on equity instead of Return on Investment.
In practice sometimes they might also come to agreement on the debt held and how it will be handled, though it is not necessary since that is also the conveyance to the cashflow. Also othe items like preffered stocks and othe mezzanine stocks which are special financing vehicles created for particular reasons company faces like slump and expected growth in the future etc;.

Thanks for the Lead!!! Nice Referral.

Enterprise Value is an economic measure reflecting the market value of the whole business. It is a sum of claims of all the security-holders: debtholders, preferred shareholders, minority shareholders, common equity holders, and others. Enterprise value is one of the fundamental metrics used in business valuation, financial modeling, accounting, portfolio analysis, etc.

It is calculated by the following formulae:-

 Enterprise value =  common equity at equity value + debt at market value + minority interest at market value, if any -associate company at market value, if any + preferred equity at market value - cash and cash-equivalents.