Description of this paper

Wall Street consensus was that Philip Morriss

Description

solution


Question

Wall Street consensus was that Philip Morriss;At year-end 1991, the Wall Street consensus was that Philip Morris?s earnings and dividends would grow at 20% for five years, after which growth would fall to a marketlike 7%. Analysts also projected a required rate of return of 10% for the U.S. equity market.;a. Using the data in the accompanying table 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.;b. Using the data in the accompanying table, calculate Philip Morris?s price?earnings ratio and the price?earnings ratio relative to the S&P 500 Stock Index as of December 31, 1991.;c. Using the data in the accompanying table, calculate Philip Morris?s price?book ratio (i.e., ratio of market value to book value) and the price?book ratio relative to the S&P 500 Stock Index as of December 31, 1991.;Philip Morris Corporation;Selected Financial Data;Years Ending December 31;($ millions except per share data);1991;1981;Earnings per share;$4.24;$0.66;Dividends per share;$1.91;$0.25;Stockholders? equity;12,512;3,234;Total liabilities and stockholders? equity;47,384;$9,180;Other data;Philip Morris;Common shares outstanding (millions);920;1,003;Closing price common stock;$80.250;$6.125;S&P 500 Stock Index;Closing price;417.09;122.55;Earnings per share;16.29;15.36;Book value per share;161.08;109.43

 

Paper#28612 | Written in 18-Jul-2015

Price : $37
SiteLock