The Applied Research Of The Making-decision Method Which Based On Infrastructure Projects Of Real Option-Taking Metro Project Of S City For Example

With the development of the economy, infrastructure construction becomes more andmore important. However, when the managers make decisions about investment projects, theproblem how to make reasonable judgment about the value of projects has been become moreand more common. This paper provides a reference for the decision-makers through theapplied research of the making-decision method which based on infrastructure projects of realoption and make empirical study about real option theory.Investment decision of the infrastructure projects as the research object, referring to realoption properties involved in infrastructure projects, this paper makes the investmentevaluation through adopting making-decision method of real option and compare with thedifferent results. At the same time, this paper also considers the correlation effect between thereal options. We compute the value of real option combination which involved in projectsthrough using both the fuzzy mathematics and Geske compound option methods. Further, wegive an analysis about the results. Finally, we offer several advices about the existingproblems which appear in reality application of the making-decision method of real option.The results of research demonstrate that making-decision method of real option is muchmore accuracy than the traditional investment decision method when we evaluate the projectswhich largely have an uncertainty because we consider the management flexibility. When weuse different real option pricing models make a price for the real option involved ininfrastructure projects, referring to the short-term real option, we may adopt the B-S methodor Monte Carlo simulation method to fix a price, nevertheless, referring to the long-term realoption, we can use the binary tree method.