The present value of growth opportunities (PVGO) is equal toI) the difference between a stock's price and its no-growth value per share.II) the stock's price.III) zero if its return on equity equals the discount rate.IV) the net present value of favorable investment opportunities.

A) I and IV
B) II and IV
C) I, III, and IV
D) II, III, and IV
E) III and IV

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, factoring in the time value of money.

Growth Opportunities

Potential scenarios or investments that could lead to an increase in business scale, revenue, or profits.

No-growth Value

The value of a company assuming that it will not experience any future growth in earnings or dividends.