The Application Of Real Option In The Assessment Of New Product Investment Projects

Investment decision-making of new products producing is one of decisions that the company managers often need to make, which directly decides the future of the company. So it is very important to choose the right evaluation tools which influence the project and the company's value. In today's economic environment, a great deal of new products that embody high risks and many profits are opened out. It is certain that the company must make many producing designs and must bear great risk because of the uncertain investment environment. As a design maker, he needs to consider how to control the risk, and what is the right way to evaluate the value of a new products producing project. The tradition evaluating methods for new products producing projects is mostly DCF (discontented cash flow) methods. And the DCF methods study the risk and profit that the projects have from the static view, which sometimes neglects the value of flexible managing and can't be applied in reality.The real options theory is based on the finance options pricing model, and has the basic conditions to be applied in practice now. The real options theory's maximal character which considers the irreversibility, the uncertainty and the flexibility of investment is related to the uncertainty of the investment. So it can measure the value of the flexibility and help manager decrease its potential losing according to his design-making exploring.The article wants to analysis the producing design-making of new products in real options theory so that it can make up the deficiency of traditional methods that are unable to fit the uncertain environment. The basic method of research for the article is comparative analyses. The article can be divided into four parts. The first one is about the...