The Investment Evaluation Of R&D Project Under Uncertain Conditions

R&D has been the very important part of core competence of enterprises and its function has become more and more prominent. As a result, investment evaluation of R&D project is increasingly significant. R&D project generally has such characteristic as high uncertain and no immediate return that it is hard to evaluate its value correctly. But R&D can create future investment opportunities which are valuable. The traditionlly evaluating method represented by Discount Cash Flow (DCF) always underestimates the value of R&D project, because it ignores the value of operation option embodied in the project. So, it is hoped to find a more effective evaluation theory and method which can replace DCF method. The advent and development of real option theory provide a revolutionary tool for R&D investment evaluation. Based on the research background, this thesis has carried out the following work:Firstly, this thesis has introduced the basic concepts and characteristics of option and real option and discussed how to apply the real option theory to R&D investment evaluation. And it has analyzed the advantage of the real option evaluation through comparing real option and traditional evaluation tools. Meanwhile, it has summed up the difficult problems which have to be solved when applying real option evaluation.Secondly, this thesis has analyzed which aspects we should consider the project value of R&D from and how to choose the correct mode to computer the value. Then it has introduced the relative theories and models and provided illustrative examples.Thirdly, this thesis has analyzed how to evaluate the value of R&D project under the random fuzzy environment. It has applied jump process to depict the motion of underlying assets of the R&D projects. And based on this, it has developed a random fuzzy jump model to evaluate the valueof R&D project, applied random fuzzy simulation to solve the model and provided an illustrative example.