The Application Research Of The Option Value On First-stage Golmud Wind Power Project

This paper valued the evaluation of a project named as Golmud first-stage wind power project which is the first wind power investment made by X Company. The whole project was separated into two stages, and the second stage of this project was going to be carried out unless the fist sage went well which was implemented in 2013. Based on project analysis and the real option theory, Golmud wind power first-stage project differs from ordinary projects for its real option. Therefore, for supporting the decision-making of X Company, this paper focused on valuing the project evaluation scientifically.Compared with traditional discount cash flow, the advantage of the real option theory is that it includes the option value of uncertainty. Considering the characters of Golmud wind power investment project, I think it’s proper to use the real option method to value this project. Primarily, this paper analyzed the applicability of using real option method in Golmud wind power investment project. Within the study of its cryptic option characters, the result showed that there was expansion option of first-stage Golmud wind power investment, which declared the rationality of using the real option method in this paper. Then, the B-S model was selected to calculate the option. Eventually, using B-S model, the option value of the first-stage Golmud wind power investment was RMB 61,894,200. Plus the estimated traditional net present value, which was RMB 32,866,600, the final value of the first-stage Golmud wind power investment is RMB 94,760,800, which proved this project was profitable.For the various uncertainty and large influence of the first-stage Golmud wind power investment, this paper used the real option theory, financial investment theory and discount cash flow method to estimate the value of this project, hoping to provide valuable reference for X Company to make investment decision.