Research On Investment Decisions Of High Technology Project Based On Real Options

With the rapid development of high technology industry in our country, it is a hot issue of the study on project investment decisions that how to evaluate the investments of high technology characterized by high uncertainty. This issue is also the main content of this paper.The research work is carried out around the application of real options approach to project investment decisions in high technology. Firstly, the paper reviews the traditional investment decision methods represented by the DCF method and points out their defects under uncertain environment. Secondly, real options approach based on financial options theory and models is introduced and it can correctly appraise the value of managerial flexibility in the project under uncertain environment, which is crucial to the evaluation of high technology project investment. Thirdly, the paper proves its real option characteristics by analyzing uncertainty and staged investment of high technology project. Then, decision analysis framework based on real options of high technology project investment is set up and the application of the binomial options tree model is tried to extend in order to solve the specific problems in investment. Finally, a case is used to test the rationality and validity of the extended application.The conclusion of the study has academic and practical values in a certain extent for completing decision system and method of high technology project investment.