Investment valuation analysis with artificial neural networks
İnce, Hüseyin and Sayım, Kadir and İmamoğlu, Salih Zeki and Kasap, Nihat (2017) Investment valuation analysis with artificial neural networks. Doğuş University Journal (Doğuş Üniversitesi Dergisi), 18 (2). pp. 85-96. ISSN 1302-6739 (print) 1308-6979 (online)
This paper shows that discounted cash flow and net present value, which are traditional investment valuation models, can be combined with artificial neural network model forecasting. The main inputs for the valuation models, such as revenue, costs, capital expenditure, and their growth rates, are heavily related to sector dynamics and macroeconomics. The growth rates of those inputs are related to inflation and exchange rates. Therefore, predicting inflation and exchange rates is a critical issue for the valuation output. In this paper, the Turkish economy’s inflation rate and the exchange rate of USD/TRY are forecast by artificial neural networks and implemented to the discounted cash flow model. Finally, the results are benchmarked with conventional practices.
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