XYZ corp expects to earn $4.3 per share next year and plow back 41.86% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 58.14% 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%?  $_

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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XYZ corp expects to earn $4.3 per share next year and plow back 41.86% of its earnings (i.e., it expects to pay out a dividend of $2.5 per share, representing 58.14% 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%?  $_________

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