WHAT IS THE MOST LIKELY VALUE OF THE PVGO FOR A STOCK WITH CURRENT...

16. What is the most likely value of the PVGO for a stock with current price of $50, expected earnings of $6 per share, and a required return of 20 percent? A) $10 B) $20 C) $25 D) $30 E) $40 Solution B Cash Cow Value = EPS / r = 6 / 0.2 = $30 PVGO = Price – Cash Cow Value = 50 – 30 = $20