Applied Research Of Real Option Theory In Ship Investment Decision

As the precondition of ship operation, vessel investment is a key issue which determines the revenue of shipping company, thus the analysis of vessel investment is important. Due to traditional static investment analysis method is based on cash flow and cannot reflect the agile decision, its application is very limited.Based on the financial option method, real option method regards the investment project as option. In the long turn, shipping company will make agile tactics to response with uncertainty in the shipping market. Thanks to the long turn and large sum of vessel investment, the cash flow discounting method may decrease the value of vessel investment project, real option method can reflect the flexibility in investment project.On the basis of current study, this paper will apply real option theory into the vessel investment decision. The paper points out the importance of vessel investment by predicting the fleet development. After analyzing the characteristics and influential factors of shipping investment, the paper introduces the theory of real option. Based on the cash flow forecasting, this paper will price the single option of compound option. Considering the practical constraints factors, the paper uses fuzzy theory to calculate the variation coefficient of single option. Then the practical value of the compound option will be calculated. Furthermore, the model is expanded to the condition that the cash flow is uncertain with the fuzzy number. The paper uses fuzzy number to represent the cash flow uncertainty and calculates the value of compound option. Finally, the paper also points out the application limitation and the future direction of development.