Tri-coat Paints has a current market value of $50 per share with earnings of $5.97. What is the present value of its growth opportunities (PVGO) if the required return is 12%?

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23-07-2020
Business

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Tri-coat Paints has a current market value of $50 per share with earnings of $5.97. What is the present value of its growth opportunities (PVGO) if the required return is 12%?

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topeadeniran2 topeadeniran2 · Answer 1 · 2020-07-23T05:06:48+02:00

Answer: $0.25

Explanation:

Fron the question, we are informed that Tri-coat Paints has a current market value of $50 per share with earnings of $5.97. We are further told that the required return is 12%.

The present value of its growth opportunities (PVGO) will be:

= $50 - ($5.97/12%)

= $50 - ($5.97/0.12)

= $50 - $49.75

= $0.25

Therefore, the present value of its growth opportunities (PVGO) if the required return is 12% is $0.25.