Alpha Corps earnings and dividends are growing at 15 percent per year. Beta Corps earnings and dividends

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Alpha Corp’s earnings and dividends are growing at 15 percent per year. Beta Corp’s earnings and dividends are growing at 8 percent per year. The companies’ assets, earnings, and dividends per share are now (at date 0) exactly the same. Yet PVGO accounts for a greater fraction of Beta Corp’s stock price. How is this possible?

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Principles of Corporate Finance

ISBN: 978-0072869460

7th edition

Authors: Richard A. Brealey, Stewart C. Myers

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