Research On Decision Of Investment Based On Real Opotion Approach

The world economy in the post crisis recovery and change of external environment,instability and uncertainty increased significantly,increase the difficulty to deal with risks and challenges,China's economic development has entered a new norm,the traditional resource advantage is weakening,the development of the manufacturing industry is facing new challenges.In the future economic situation and industry environment,a number of large,long cycle of investment projects,the use of traditional decision-making tools may not be able to deal with these uncertainties or pricing of the project.However,the development of real option theory is based on the understanding of the shortcomings of traditional investment decision methods in practical application.Pulp and paper industry is a basic industry of the nation.Pulp and paper projects affected by the current economic environment,policies and regulations,the project is uncertain,the future cash flow is difficult to predict,these characteristics determine the applicability of the real option method to its investment decisions.In this paper,based on the above background and theoretical basis,the paper takes pulp and paper project as an example to explore the application of real option in investment decision making.First of all,this paper reviews the domestic and foreign research results of real options through literature review.Then,the paper discusses the existing investment decision-making theory and the basic theory of real options.Then,the characteristics of pulp and paper industry status and project analysis,project feasibility study of real option method,and introduce the concept of fuzzy mathematics based on the traditional real option pricing model,expand the option value range,to determine the parameters of the real option pricing model,for the case analysis to lay the foundation.Then,by the way of case analysis,the author gives the procedure and method of real option investment decision,and compares it with the traditional investment decision procedure.Finally,to further improve the investment decision-making system,to explore more conducive to investment projects,investment decision-making methods,and make relevant recommendations,and draw some conclusions.This paper provides some reference through real option application in pulp and paper projects in the project investment decision,to make a reasonable judgment to the evaluation of the value of the project can provide technical tools necessary for enterprises to reduce risk and increase income.