Application Research Of Real Options In Value Assessment

Some special resources such as patent right, patent technology, land employmentright and natural resource have option value themselves. However, Traditionalassessment method --Cost Plus method, Discounted Cash Flow method and others,can not assess the fair based value of those resources objectively. And Option PricingModel is limited to and only applied in financial option. Therefore, it's necessary toapply the financial option pricing method to the assessment of real options. Thisarticle began with the concept of real options, then furthered into the basic charactersof real options and based on which, classified real options into Option to deferinvestment, Option to expand/ contract, Option to abandon, Option to shut down andreopen, Growth Option, Compound Option and Rainbow Option. At the same time,the author also designed a real options pricing model to interpret real options'application processes in value assessment as well as indicate the suitability and limitsof real options in value assessment.