ACCOUNTING-At year-end 1991, the Wall Street consensus was that Philip Morris’s

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. Assumea 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 CorporationSelected Financial DataYears Ending December 31($ millions except per share data)19911981Earnings per share$4.24$0.66Dividends per share$1.91$0.25Stockholders’ equity12,5123,234Total liabilities and stockholders’ equity47,384$9,180Other dataPhilip MorrisCommon shares outstanding (millions)9201,003Closing price common stock$80.250$6.125S&P 500 Stock Index:Closing price417.09122.55Earnings per share16.2915.36Book value per share161.08109.43