The net present value of future growth opportunities (NPVGO) will contribute to an above average P/E multiple when the additional share value created is
A) positive and the return on new investment is lower than the cost of equity capital.
B) positive and the return on new investment is greater than the cost of equity capital.
C) negative and the return on new investment is lower than the cost of equity capital.
D) negative and the return on new investment is greater than the cost of equity capital.
Correct Answer:
Verified
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