The present value of growth opportunities (PVGO) is equal to I) the difference between a stock's price and its no-growth value per share.
II) the stock's price.
III) zero if its return on equity equals the discount rate.
IV) the net present value of favorable investment opportunities.

Question

Quizplus · Accepted Answer

The present value of growth opportunities (PVGO) is indeed the difference between a stock's price and its no-growth value per share (I), is zero if its return on equity equals the discount rate (III), and represents the net present value of favorable investment opportunities (IV). These elements capture the essence of PVGO, which is essentially the value attributed to a company's future growth opportunities beyond its current operations.

The Present Value of Growth Opportunities (PVGO) Is Equal to I)