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Definition of Growth opportunity
opportunity to invest in profitable projects.
Version of the dividend discount model in which dividends grow at a constant rate.
Also called the Gordon-Shapiro model, an application of the dividend discount
Times in a company's history when growth is essential and without which survival of the business might be in jeopardy.
a method of computing the cost
A model wherein dividends are assumed to be at a constant rate in perpetuity.
Mutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities.
A money manager who seeks to buy stocks that are typically selling at relatively high P/E
A phase of development in which a company experiences rapid earnings growth as it produces
an estimate of the increase expected in dividends
Compound annual growth rate for the number of full fiscal years shown. If there is a negative
Common stock of a company that has an opportunity to invest money and earn more than the
Maximum rate a firm can expand without outside source of funding. growth generated
Maximum rate of growth without external financing.
A model valuing a firm in which net present value of new
The lost opportunity of not doing something, which may be financial or non-financial, e.g. time.
a potential benefit that is foregone because
Lost revenue that would otherwise have been realized if a different
Benefit or cash flow forgone as a result of an action.
The forgone value of an alternative not chosen, usually the most profitable alternative.
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
opportunity cost of capital
the highest rate of return that
opportunity cost of capital
Expected rate of return given up by investing in a project.
The difference in the performance of an actual investment and a desired investment
The possible expected return and standard deviation pairs of all portfolios that can be
Personal Responsibility and Work Opportunity Reconciliation Act
A federal Act requiring the reporting of new hires into a national database.
Portfolio opportunity set
The expected return/standard deviation pairs of all portfolios that can be
Present value of growth opportunities (NPV)
Net present value of investments the firm is expected to make
present value of growth opportunities (PVGO)
Net present value of a firm’s future investments.
Simple compound growth method
A method of calculating the growth rate by relating the terminal value to
Sustainable growth rate
Maximum rate of growth a firm can sustain without increasing financial leverage.
sustainable growth rate
Steady rate at which a firm can grow without changing leverage; plowback ratio × return on equity.
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