Study On Investment Evaluation Method Of Coal Chemical Project Based On Real Option

The coal chemical industry plays a fundamental role in such tasks as relieving disparitiesbetween supply and demand of petroleum and gasoline in our nation, and thusly, enhance thedevelopment of the iron and steel industry,chemical engineering, light industry and agriculture.Coal chemical project faces investment risks, which needs high requirements of investmentevaluation. Real option approach can effectively deal with the uncertainty in the projectinvestment, and thus scientifically evaluate and manage the project investment process.This article，we firstly give contrastive analysis between the real option method andconventional methods based on a summary of the research status and related theories. Weprove that under uncertain market environment, conventional methods ignore the flexibilityand irreversibility of coal chemical industry project. But the real option method dose；then,westudy the mechanism of the option value of coal chemical industrial project,find that the grossprice is a sum of net present value of cash flow and flexible value of the project；next,basedon binary tree pricing methods we build coal chemical project investment evaluation method,including the option to defer、the option to expand、shrink options and compound optionmethod, and pointed out how to determine these parameters；finally,we give an instanceanalysis on northern Shaanxi coal methanol project，we give an effective analysis to theproject value, find that real option method gives an apparently higher project value thanconventional methods do and a compound option helps a lot in increasing the value,bycounting methanol price data, we estimate the volatility of methanol prices.Sensitivityanalysis of parameters gives us the idea that strike price is negatively related to the optionvalue while the risk-free interest rate, the asset value and volatility positively related to theoption value, brings the investors references.