CFA Examination Level I At year-end 1991, the Wall Street consensus was that Philip Morris? earnings and dividends would grow at 20 percent for five years after which growth would fall to a market-like 7 percent. Analysts also projected a required rate of return of 10 percent for the U.S. equity market. a. Using the data in Table 6 and the multistage dividend discount model, calculate the intrinsic value of Philip Morris stock at year-end 1991. Assume a similar level of risk for Philip Morris stock as for the typical U.S. stock. Show all work. b. Using the data in Table 6, calculate Philip Morris? price/earnings ratio and the price/earnings ratio relative to the S&P Industrials Index as of December 31, 1991. c. Using the data in Table 6, calculate Philip Morris? price/book ratio and the rice/book ratio relative to the S&P Industrials Index as of December 31, 1991.
calculate Philip Morris? price/book ratio and the rice/book ratio relative to the S&P Industrials...
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