The present value of growth opportunities (PVGO) is equal to I) the difference between a stock's...
The present value of growth opportunities (PVGO) is equal to I) the difference between a stock's price and its no-growth value per share. II) the stock's price. III) zero if its return on equity equals the discount rate. IV) the net present value of favorable investment opportunities. A. I and IV B. II and IV C. I, III, and IV D. II, III, and IV E. III and IV
Homework Answers
PVGO equals:
a. the difference between a stock's price and its no-growth value per share
b. zero if its return on equity equals the discount rate.
c. the net present value of favorable investment opportunities.
Hence I , III and IV are correct.
The option C is correct.
Also, Stock Price = the stock's price equals the no-growth value per share plus the present value of growth opportunities.
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