Track: Engineering Economy

Abstract

Determination of the theoretical price of a stock using a dividend discount model is done by setting various levels of dividend growth. The problem is what if dividend growth is assumed to follow a time series. In this paper it aims to discuss stock valuation using a fluctuating dividend discount model along with the time series. It is assumed that the expected dividend fluctuate with time series model. To estimate the magnitude the expected dividend was performed using a model autoregressive integrated moving average (ARIMA). As for determining the theoretical price of the stock is done by using the dividend discount models, which include some level of growth. Based on the dividend discount model of stock prices in the period to n+1 shows the current value of all dividend payments over a period of 2 (n+1 through infinite time).