DEFINITION of 'Net Present Value Of Growth Opportunities  NPVGO'
A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. The net present value of growth opportunities is used to determine the intrinsic value of a new project or acquisition at a given point in time, based on projected amounts.
NPVGO is calculated by taking the net cash inflow, discounted at the firm's cost of capital, less the purchase price of the additional asset. It is also referred to simply as the present value of growth opportunities (PVGO).
INVESTOPEDIA EXPLAINS 'Net Present Value Of Growth Opportunities  NPVGO'
By computing the present value of growth opportunities, a company can determine what the new addition or expansion project will add to the value of the existing firm. Even further, an appropriate purchase price can be determined by using the present value model.
By deducting the purchase price from the present value of growth opportunities, you will be left with the net present value of growth opportunities.
VIDEO

Net Present Value  NPV
The difference between the present value of cash inflows and ... 
Discount Rate
The interest rate charged to commercial banks and other depository ... 
Internal Rate Of Return  IRR
The discount rate often used in capital budgeting that makes ... 
Present Value Interest Factor  ...
A factor that can be used to simplify the calculation for finding ... 
Present Value  PV
The current worth of a future sum of money or stream of cash ... 
Capital Budgeting
The process in which a business determines whether projects such ...

What are the disadvantages of using net present value as an investment criterion?
While net present value (NPV) calculations are useful when you are valuing investment opportunities, the process is by no ... Read Full Answer >> 
What's the difference between net present value and internal rate of return? How ...
Both of these measurements are primarily used in capital budgeting, the process by which companies determine whether a new ... Read Full Answer >> 
Which is a better measure for capital budgeting, IRR or NPV?
In capital budgeting, there are a number of different approaches that can be used to evaluate any given project, and each ... Read Full Answer >> 
How does transfer pricing help business?
Transfer pricing involves the trade of goods or services between two related companies, and both can come out the winner. ... Read Full Answer >> 
Does the tradeoff model or the pecking order play a greater role in capital budgeting?
The static tradeoff theory and the pecking order theory are two financial principles that help a company choose its capital ... Read Full Answer >> 
How do I calculate my effective tax rate using Excel?
Your effective tax rate can be calculated using Microsoft Excel through a few standard functions and an accurate breakdown ... Read Full Answer >>

Economics
How to Do a CostBenefit Analysis
The benefits of a given situation or businessrelated action are summed and then the costs associated with taking that action are subtracted. 
Technical Indicators
Will These HighFlying Stocks Stay Hot in 2015?
These 10 stocks were on fire in 2014. Will they stay hot? 
Investing
Apple or Google: Which is the Better Bet?
Apple and Google have made many investors rich since the turn of the century. Which is more appealing going forward? 
Fundamental Analysis
Invest in Cancer Research with These 3 Stocks
These cancer research stocks offer both a high ceiling and the potential to save lives. 
Charts & Patterns
Should Investors Get Into Oil Now?
Oil has enjoyed a steady climb after a violent plunge. Where is it going next, and how can investors profit? 
Fundamental Analysis
Calculating the HerfindahlHirschman Index (HHI)
The HerfindhalHirschman Index, (HHI) is a measure of market concentration and competition among market participants. 
Economics
What are Noncurrent Assets?
Noncurrent assets are property that a company owns that will last for more than one year. 
Investing
What More Volatility Means For Momentum Stocks
One byproduct of the recent tick higher in bond yields: a meaningful rise in volatility for both stocks and bonds. 
Investing
How To Implement A Smart Beta Investing Strategy
Smart beta investing is the notion of rewriting investment rules to improve investment outcomes by targeting exposures to intuitive ideas or factors. 
Charts & Patterns
How To Value Airline Stocks
We explain what drives the stocks of airline companies and how best to assess their values.