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 ... 
Capital Budgeting
The process in which a business determines whether projects such ... 
Present Value  PV
The current worth of a future sum of money or stream of cash ...

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 >>

Investing
What's a Debit Note?
A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaserâ€™s account. ... 
Fundamental Analysis
Efficiency Ratio
There are many types of efficiency ratios, but all measure how well a company utilizes its resources to make a profit. Business managers use these ratios to determine how well they are operating ... 
Investing Basics
What is Profit?
Profit is a general term used to denote when earnings exceed the expenses incurred to generate those earnings. 
Investing
What's Capitalization?
Capitalization has different meanings depending on the context. 
Investing
Deferred Tax Liability
Deferred tax liability is a tax that has been assessed or is due for the current period, but has not yet been paid. The deferral arises because of timing differences between the accrual of the ... 
Charts & Patterns
Why These Are 2015's MostPromising Bank Stocks
Which bank stocks should offer the best bang for your buck in 2015? Possibly these, so read on. 
Fundamental Analysis
Interested In Pharmaceutical Stocks? Try Novartis (ADR)
Novartis AG, is the world's leading pharmaceutical company by sales. Here is a closer look at Novartis, and how its financials stack up. 
Fundamental Analysis
Is Apple's Stock Over Valued Or Undervalued?
Despite several drawbacks, the CAPM gives an overview of the level of return that investors should expect for bearing only systematic risk. Applying Apple, we get annual expected return of about ... 
Fundamental Analysis
The Best 5 Online Accounting Systems For Small Business
Running a small business can be difficult, but thanks to these online accounting services, taking care of payroll doesn't have to be. 
Savings
Top 10 Fastest Growing Industries in the United States
Six of the ten fastest growing industries are directly related to new residential construction.