PVGO

Hi, should we use Earning from today, or from next year when calc PVGO ?

Formula says Value = E1/r+PVGO

For example, we have todays earning 3, and growth rate 10 %. You would use 3 or 3,3?

http://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91340316

might help

Tnx,

So, 3 should be used in my case?

If earnings are growing 10% a year; use 3,3.

Vo=E1/r + PVGO

I think the mock this year showed us that the assumption under the PVGO formula is that E1 does not change. Basically the first component is if all earnings is paid out (so no retention = no growth) and then the second takes into account growth and its value (the PVGO component).