Now let's talk about "almost" EXACTLY how page rank is calculated. Over 99% of the webmasters on the internet do not understand how Page Rank(PR) is calculated. I'm going to refer to Page Rank as PR throughout the rest of this article, for the sake of not having to type it over and over.
So, why does it matter how PR is calculated?
It matters because you can use this knowledge to actually funnel PR throughout your website and give different pages on your site a higher PR. The higher your PR is, the higher your webpage will rank in Google.
Here is the Google Page Rank Formula, and I'm warning you... This might get a little nerdy, but bear with me. I'll make everything very understandable.
Page Rank Formula:
0.15 + (0.85 * (a "share" of the PR of every webpage that links to it)) = Your webpage rank
Where
0.15 = The lowest PR a webpage could ever possibly have.
0.85 = A dampening factor... This is just the number that Google uses for their PR formula.
"share" = the PR of the page linking to you divided by the total number of links on that page.
Example:
Say we've created our website and it has 3 pages in total. For sake of making the math easy, we'll start each webpage with a page rank of 1.
 Page A have PR 1.
 Page B have PR 1.
 Page C have PR 1.
None of the pages link to each other. They're just pure content webpages with no links to any other pages within our website. Let's quickly calculate the PR of our pages by using the formula above.
0.15 + (0.85 0) = 0.15
Because no webpages link to our pages, there is no "share of PR"... hence it is 0.
So... If we do the math, we come up with a PR of .15 for each of our pages. Not very good huh?
Now, let's see what happens if we link page A to page B.
Using our formula we get:
 Page A: 0.15 + (0.85 * 0) = 0.15
 Page B: 0.15 + (0.85 * (1/1)) = 1
 Page C: 0.15 + (0.85 * 0) = 0.15
You can see that by just linking page A to page B, we've changed the PR of page B from .15 all the way up to 1. Big difference!
With our newly calculated Page Ranks for all of our pages, let's do the calculation again. By doing so, we'll slowly get to the "true page rank" of all of our pages... The more iterations we do, the more gradual the change will be between each iteration.
 Page A: 0.15 + (0.85 * 0) = 0.15
 Page B: 0.15 + (0.85 * (15/1)) = 0.2775
 Page C: 0.15 + (0.85 * 0) = 0.15
You can see that after another iteration of our formula, the PR of page B dropped
significantly... This number is closer to the actual Page Rank that Google would give page B.
Note: You can keep going through the formula and you'll notice that the change will be smaller after each iteration...
Now, let's try something different and link all pages to and from one another...
 Page A: 0.15 + (0.85 * (1/2)) = 0.575
 Page B: 0.15 + (0.85 * (1/2)) = 0.575
 Page C: 0.15 + (0.85 * (1/2)) = 0.575
After 1 iteration the Page Rank of all pages is 0.575.
So, by linking ALL pages together we have maximized the page rank from within our website!
You can play around with your linking throughout your website and by doing so, you can send more PR to pages you want to rank higher for, and lowering the PR of those pages you don't care much about their ranking :)
This can be extremely powerful.
