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7 July, 17:06

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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  1. 7 July, 20:17
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    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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