Generally speaking,as the firm progresses through the industry life cycle you would expect the PVGO to ________ as a percent of share price.

Question

Quizplus · Accepted Answer

As the industry matures and the firm settles into a stable growth phase, the growth rate slows down, leading to a decrease in the PVGO component of the share price. This is because the present value of future growth opportunities becomes less significant as a proportion of the share price. Additionally, as the competition in the industry increases, the profitability of the firm reduces, impacting the PVGO negatively. Therefore, option B is correct.

Generally Speaking,as the Firm Progresses Through the Industry Life Cycle