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    Capitalized Value of EPS in a No-growth Policy

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    Presume the per share PVGO of a firm's common stock is computed as $44, and the firm's current market price is $56. This implies that the capitalized value of the earnings per share the firm is expected to generate under a no-growth policy is:

    a) $12
    b) $44
    c) $50
    d) $56
    e) $100

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    Net present value of growth opportunities. Can be calculated as: NPVGO = P1 - EPS / r where P1 is the current share ...

    Solution Summary

    The solution computes the capitalized value of EPS in a no-growth policy