Research On Real Option-Pricing Method

As the enterprise operation environment is becoming more and more complex and uncertain, the traditional investment decision methods, representated by the NPV principle, can not be suitable for evaluating the real value of the project any longer due to neglection of the capital investment operating and strategic adaptability. The real option theory, however, regards opportunities and flexibilities as options to analyze, and takes the flexibilities' value into full consideration, so the real option method is an important development of the investment decision theory. Nowadays, the real options theory is not widely used in the real investment decision, so it is necessary to carry out a overall research on the real option-pricing theory and establish a practical investment decision method.In this thesis, a combination of the quantitative and qualitative analyses with the quantitative analysis as the main research method, was adopted to research on investment decision methods, based on the real option theory. Fistly, it analysed the merits and limitations of the traditional investment decision methods, and then compared it with real options. Secondly, it analysed the definition, classification and nature of the real options, and the procedures and features of the real options methods. Then, it does a further research on the discrete and continuous evaluation method of real options. A logical process of proposing analysis framework, constructing method and concluding is used. The discrete evaluation method of real option was adopted to carry out a pricing research on the real investment decision opportunities, and some examples were provided to support the research. The continuous evaluation method was adopted to analyse projects which could be delayed. The thesis also applied the fuzzy theory to the valuation of multiple real options. Lastly, it analyzed the application of real option theory in the strategic investment and corporation merger and put forward a multi-stage investment method. It analyzed the mainproblems in the investment decision process of domestic corporation and discussed the construction of a flexible decision system.This thesis provided a practical and effictive means to the investment decision of enterprise. It has important theoretical and practical significance to make investment decision correctly.