Assessment Study, Based On Real Option Value Of Intangible Assets

Intangible assets has been assuming greater functions and values in an era of rapid development of society. Intangible assets evaluation can apply in many economic activities, especially where trading of ownership of intangible assets occurs. It is important that the evaluation is correct, which serves to uphold the rights of both parties. In view of this, it is imperative that we have reasonable and scientific evaluation of intangible assets.Traditional methods can depreciate the actual value of intangible assets because of neglecting of the flexibility under uncertainties. As a new method of value evaluation, real options method takes full consideration of operation adaptability and management flexibility, which enables real options method a necessary way of intangible assets evaluation.Based on the understanding of real options and traditional intangible asset evaluation method, the characteristics of real options are analyzed, which fits into the characteristic of option object asset. The B-S model and binary model are used in the evaluation of intangible asset and real option pricing model and identification of its parameters are formed accordingly. The last part is about the application of real options. Two cases are analyzed and compared between the value of intangible assets with or without the application of real options method. Thus, the conclusion are formed as follows:(1) Based on the advantages and disadvantages of traditional assets evaluation methods, the value can be underestimated when it comes to more flexible and uncertain intangible assets. So in order to have a comprehensive evaluation of intangible assets, it is necessary to supplement traditional methods with real option models in the evaluation process to make it more scientifically correct.(2) The real option characteristics of intangible assets are thoroughly analyzed. Possession of intangible assets means that the enterprise has the right to carry out particular investments or utilize resources, which is the characteristic of options. The enterprise possessing intangible assets will only make ensuing investments when corresponding prices change favorably. And the bigger fluctuation of expected value of investment projects, the higher the value of intangible assets will be, which qualifies intangible assets as option object assets.(3) The real options pricing model are selected to identify corresponding parameters. The evaluation methods of intangible assets include B-S partial differential equations and binary tree model. Though the models are both based on Non-Arbitrage Equilibrium and risk neutral, the use of binary tree model are more frequent because it can be simulated by computer. The use of partial differential equation model is limited due to its more strict restricts.In the end, the research conclusion are summarized and suggestions of future...