I’ve seen multiple older threads on this but haven’t seen a resolution. Do we use E(0) or E(1) for PVGO? Practice problems through CFA use E(0) but Schweser uses E(1). Any help?
In every question I have used E1. In which question specifically have you used E0 in CFAI?
CFA Institute and I have argued about this over the years and they said that they were going to change it: it should be E0.
That’s a little bit concerning if there isn’t universal agreement on this. I have always used e1… hopefully if it is tested on the exam, they wouldn’t provide one answer choice using e0 AND another possible answer choice using e1. What to do in that situation?
Leave the exam room, send all of your worldly possessions to me, shave your head, move to a remote mountaintop, and start a monastery
The 2019 curriculum and TTS both use e1, and I have always used e1 doing any CFAI question. Logically e0 feels the right one to use, but judging by what’s in the curriculum this year e0 won’t get us the correct answer.
E(0) = E(1) when there is no growth. That’s why it does not matter if we use E(0) or E(1) in the formula as long as you understand it is referring to the No growth Earnings. But my understanding might be wrong.