Study Of Investment Evaluation Of The Traffic Infrastructure Project Based On The Binomial Tree Model Of Real Option

Considering the special status of traffic infrastructure and its huge effect on the economy, we need keep discreet to decide the investment of traffic infrastructure, and how to evaluate the investment project correctly appears to be very important. Traditional evaluation methods do not consider the uncertainty of the future cash flow of the project and the mobility during the execution, on the contrary, real option can evaluate the uncertainty correctly, catch the sensitivity duly, cope with the irreversibility of the investment efficiently and have the advantage in reflecting the market value.This paper uses the option value index to evaluate and plan the investment through the conformation of option value figure. When there are more than one kinds of option in the investment project, the impact on each other may lead the difficulty in determining the complex option value. Through the design of the co-probability function of the double real option model, based on the addition measuration model of the double real option, we can learn the pricing principle: Real Option of different type can plus directly, but real option of similar type can not plus; for the latter, the fuzzy analytical hierarchy process (FAHP) can be used to gain the gross value of the complex real option.We deem JS highway as a case study. Capital Assests Pricing Model (CAPM) is applied to decide the discount rate and then we can get the net present value. On the other hand, the value of option to defer and growth option are determined based on binomial pricing model, and we can reach the total option value through FAHP. After contrasting with the two results, the project value calculated by real option is higher than the traditional result. We can easily reach that real option is a more efficient method of project evaluation when there is much uncertainty and choice in the project investment.