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QUESTION
Alpha Corp's earnings and dividends are growing at 15% per year. Beta Corp's earnings and dividends are growing at 8% per year.
Alpha Corp’s earnings and dividends are growing at 15% per year. Beta Corp’s earnings and dividends are growing at 8% per year. The companies’ assets, earnings, and dividends per share are now (at date 0) exactly the same. Yet Present Value of Growth
Opportunities (PVGO) accounts for a greater fraction of Beta Corp’s stock price. How is this possible?
