belen4981 belen4981

31-03-2020
Business

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What is the most likely value of the Present Value of Growth Opportunities (PVGO) for a stock with a current price of $50, expected earnings of $6 per share, and a required return of 20%?

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kllovessoccer780 kllovessoccer780

31-03-2020

Answer:

20$

Explanation:

With a 100% payout ratio, the stock would be valued at $30 ($6/.20 = $30). Thus, the $20 of additional price must represent the PVGO.

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