| Project evaluation is the basis of investment decision. The existing project evaluation founds on the second edition of Economic Evaluation Method and Parameter of Construction Project issued by National Planning Commission and National Construction Administration in 1993 both in terms of the system and the method, with a lot of improvements to be made. This thesis first sheds light on the existing project evaluation system and method, disclosing the inherent shortcomings and deficiencies. It tries to introduce the real option into the existing project evaluation system, and meanwhile applies management to the existing project evaluation system roundly. What's more, the thesis also proposes some ways to improve evaluations methods.The first chapter talks about the financial evaluation theories and methods of the existing project evaluation in China, which is supposed to draw out the financial indicators of the project, the profitability, solvency and foreign exchange balance. Then the anti-risk ability of a project is studied through uncertainty analysis, which helps to draw the conclusion whether the project is feasible in terms of finance. The existing project evaluation method is based on net cash flow on the premise of time value of capital, studying the financial situation of project with most comprehensive indicator, namely, net cash flow. Besides the strengths, the net cash flow method has weaknesses too. For example, it is unable to reflect the internal value of the project or the intangible assets due to the implementation of the project. Therefore, it is necessary to improve the existing project evaluation method.Chapter two introduces the theories, ideas, and pricing of real option. Option, a sort of choice, refers to that with non-economic assets as objective assets, which are valuable. The most famous option pricing modules are Black-scoles and Two-state model. These two models have very strict restrictions that are hard to meet. Real option idea has three factors: first, option is sort of contingent decision-making power; second, option pricing is closely related to the pricing in economic market. The information of economic market can be used to evaluate all sorts of real options; and third, option idea can be used to design and manage strategy beforehand.Chapter three introduces real option pricing theory and project finance evaluation, which tries to introduce real option idea into the project evaluation. It analyzes the effects of uncertainty, operation flexibility, and strategy value on the project value. Then, it studies the option of the project, proposing that the project value constitutes of internal project value and option value. It also points out the application range of real option theory in project evaluation, the difficulties and shortcomings of real option theory and method in project evaluation. It further emphasizes on the introduction of real option theory into project evaluation, focusing on the central ideal and embodying the management theory.Chapter four introduces some other improvements based on the project evaluation method of cash flow. It puts forward the combination between prediction and reality, working out the key annual net cash flow that is of great importance to managers. It also points out the dynamic even profit or loss method, as well as more evaluation on the effect of project on the business.The thesis has made some innovations. Firstly, it introduces real option idea into the project evaluation brilliantly. Secondly, it proposes the concept, the economic significance and role of key annual cash flow and the way to get it, illustrated by actual case. Thirdly, it puts forwards the thought and method to get even profit or loss in a dynamic way based on the time value of capital and tax issues. Fourth, it points out that more evaluation should be devoted to the effect of project on the business, shedding light on the importance and the method which the project considered and evaluated from a systematic perspective.Project evaluation pl... |
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