5566

pepp Wrote:
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> safe to assume PVGO will be negative when ROE is
> less than r <<-- how are you coming to this
> conclusion?
>

because it's destroying shareholder value by producing returns below required rates of return.

the original poster is correct in his underlying assumption about how the math works. but the term itself, "present value of growth opportunities" makes me think it would be highly unlikely to be presented in the exam in such a format where PVGO is negative in value.