PT. TAAT PROKES UTAMA, (PT. TPU) has recently paid out Rp. 150 dividend per share. To support its medium-term business plan, the management intends to maintain the same figure next year. For the subsequent second and third years ahead, the management is aiming for a 5 % dividend growth, whilst for the coming fourth and fifth years the dividend will increase by 15 %. At the sixth year onwards, the dividend growth will be constant at 10% per year.

PT. JAGA JARAK BERSAMA, (PT. JJB) will be paying out a dividend of Rp200 per share for the current year. This will subsequently increase by 10 % on the second year. The companys dividend growth figures for the third year will be set at 20 % and be reduced to 15% for both the fourth and fifth years. By the sixth year, and subsequent years onwards dividend growth rate will be constant at 5% per year.

The require rate of return is set at 14%.

If the current stock price for both PT. TPU and PT. JJB are known to be Rp.3.500, should the investment be made in the stocks of PT. TPU, (as option1) or in PT. JJB (as option 2); or should you be indifferent to selecting either one (as option 3); or ultimately, should you avoid investing in neither one of them altogether (as option 4). Clarify your answer by providing detailed calculation on how you have come to such decision.