Present Value of Growth
Interactive

Present Value of Growth

Intuition Publishing
Updated Sep 23, 2020

The DDM can be extended to estimate the present value of growth opportunities (PVGO). This approach identifies two elements of a stock's worth: its value now, and the present value of future growth opportunities. Here we look at how PVGO is calcualted and how earnings growth only increases shareholder value if growth exceeds the company's cost of capital.