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Question 24 Determine the present value of growth opportunities for a company with a leading EPS of $1.65, a required rate of

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Answer #1

PVGO = Stock price – (Earnings/Cost of equity)

= $ 50 – ($ 1.65/0.08)

= $ 50 - $ 20.625

= $ 29.375 or $ 29.38

Present value of growth opportunity is $ 29.38

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