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 ... 
Capital Budgeting
The process in which a business determines whether projects such ... 
Internal Rate Of Return  IRR
The discount rate often used in capital budgeting that makes ... 
Present Value  PV
The current worth of a future sum of money or stream of cash ... 
Present Value Interest Factor  ...
A factor that can be used to simplify the calculation for finding ...

Budgeting
What's the difference between net present value and internal rate of return? How are they used?
Both of these measurements are primarily used in capital budgeting, the process by which companies determine whether a new investment or expansion opportunity is worthwhile. Given an investment ... 
Budgeting
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 approach has its own distinct advantages and disadvantages.All other ... 
Options & Futures
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 means perfect.The biggest disadvantage to the calculation of NPV is its ... 
Fundamental Analysis
What is the difference between operating income and net income?
Understand the difference between operating income and net income, including the calculations and interpretations of each when reading a balance sheet. 
Fundamental Analysis
What is the difference between operating income and EBITDA?
Read about the major differences between earnings before interest, taxes, depreciation and amortization (EBITDA) and operating income in a company's financial health. 
Fundamental Analysis
What is the difference between operating income and gross profit?
Learn more about the difference between operating income and gross profit, two accounting figures that appear on a company's income statement. 
Fundamental Analysis
What is the difference between operating income and operating profit?
Find out why operating margin and operating income can be treated synonymously with EBIT, but how they all differ from operating profit margin. 
Fundamental Analysis
What is the difference between market capitalization and enterprise value?
Understand the basics of market capitalization and enterprise value, how they measure company value and how they differ in calculation and precision. 
Fundamental Analysis
What is the difference between market capitalization and revenue?
Understand the definitions of market capitalization and revenue, how each is calculated and how each reflects the value of a company. 
Fundamental Analysis
How do you use the pricetobook ratio to evaluate a company's value?
Understand how investors and market analysts use the pricetobook ratio to evaluate the worth of a company and why this evaluation tool is useful.