Assuming all of the following firms have a required return of 14 percent, which would you expect to have a positive present value of growth opportunities?
A)A firm with a P/E ratio of 9
B)A firm with a P/E ratio of 6
C)A firm with an E/P ratio of 20 percent
D)None of the above firms are expected to have positive PVGO Required return E/P ratio if PVGO 0

Question

Assuming all of the following firms have a required return of 14 percent, which would you expect to have a positive present value of growth opportunities?
A)A firm with a P/E ratio of 9
B)A firm with a P/E ratio of 6
C)A firm with an E/P ratio of 20 percent
D)None of the above firms are expected to have positive PVGO Required return > E/P ratio if PVGO > 0

Quizplus · Accepted Answer

The Answer of Assuming all of the following firms have a required return of 14 percent, which would you expect to have a positive present value of growth opportunities?
A)A firm with a P/E ratio of 9
B)A firm with a P/E ratio of 6
C)A firm with an E/P ratio of 20 percent
D)None of the above firms are expected to have positive PVGO Required return > E/P ratio if PVGO > 0

Assuming All of the Following Firms Have a Required Return