Present value of growth opportunities


Also found in: Acronyms.

Present value of growth opportunities

Net present value (NPV) of investments the firm is expected to make in the future.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
References in periodicals archive ?
Consistent with this prediction, we find initial return to be positively related to both the fraction of the offer price that is accounted for by the present value of growth opportunities and various proxies of issue uncertainty.
Thus, I calculate the present value of growth opportunities in equilibrium for Airport i at time t (PVG[O.sub.i,t]) by adding the expectation of expansion option values of the following period's growth value (using risk-neutral probabilities) to the cash-flow value creation at the current expansion subgame, [C.sub.i,t]:
The market value of the firm is comprised of the value of assets in place and the present value of growth opportunities. The present value of growth opportunities reflects the value of future investments which are expected to yield rates of return in excess of the opportunity cost of capital.

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