I know the PVGO = Market price - (Dividend/Required Return)
In this problem there is no dividend and I’m just given earnings. I guess we are to assume that all earnings are paid as dividends? Kind of nit picky but I’m curious.
Tri-coat Paints has a current market value of $41 per share with a earnings of $3.64. What is the present value of its growth opportunities (PVGO) if the required return is 9%?
The PVGO is $0.56:
PVGO = $41 – ($3.64 / 0.09) = $0.56
(Study Session 10, Module 27.2, LOS 27.e)
Question ID: 1209684