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XYZ Inc. has been reinvesting 60% of earnings into a project that yields a return of 12%. The dividend yield is expected to be 3%

XYZ Inc. has been reinvesting 60% of earnings into a project that yields a return of 12%. The dividend yield is expected to be 3% next year. The current share price of XYZ Inc. is $120 / share.

  1. (b)What is the present value of the growth opportunities (PVGO) of XYZ Plc.? Comment briefly on the PVGO you obtained.

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