Answer to Question #281370 in Finance for amnesia

Question #281370

XYZ corp expects to earn $4.7 per share next year and plow back 46.81% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 53.19% of its earnings). The dividends are expected to grow at a constant sustainable growth rate and the stocks are currently priced at $30 per share. How much of the stock's $30 price is reflected in Present Value of Growth Opportunities (PVGO) if the investors' required rate of return is 20%? $_________


1
Expert's answer
2021-12-19T18:08:34-0500

"PVGO=30-\\frac{4.7}{20}=29.765"


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