From V_{0 }= E_{1}/r + PVGO

divide by B_{0 }then

P_{0}/B_{0 } = E_{1}/(r*B_{0}) + PVGO/B_{0}

first term becomes 1?

which gives

P_{0}/B_{0 } = 1 + PVGO/B_{0 } ???

Below is equation (5) from chapter 32.

P_{0}/B_{0 } = 1 + (PV of RI)/B_{0}

Is no growth company’s ROE = r ?

if no growth company, ROE = r

P_{0}/B_{0} = (ROE-g)/(r-g) = 1

then PVGO_{ }= 0 which means RI = 0

yes or no?

V_{0 }= E_{1}/r + PVGO

= ROE*B_{0}/r + PVGO

= ROE/r*B_{0 }+ PVGO

= B_{0} + PVGO

therefore,

PVGO = PV of RI

also,

Market value added

= Market value of company – Accounting book value of total capital

= PV of RI