PVGO & Residual income

CFA Level II
#1

If PVGO = 0 for a firm, then a) RI = 0 b) RI is constant perpetuity (adjusted for inflation) c) RI is totally dependent on NI and equity charge

#2

I think it’s A.

#3

If PVGO = 0 then the firm’s value is E1/r. If PVGO is 0 then that would mean that ROE is equal to r so your NI is equal to your equity charge. I believe it is A as well.

#4

ROE = r so RI = 0. No growth. Answer is A.