Estimate the present value of the growth opportunity


Problem: Assume that XYZ has Earnings Per share of $1.79 with a .68 cent dividend and return on equity of 24%. If the stock price is $49.22 then:

1. Use the dividend discount model to estimate the return for XYZ

2. Estimate the present value of the growth opportunity.

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Finance Basics: Estimate the present value of the growth opportunity
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