Real Option Evaluation Method for the Value of Risk Project Investment

摘要

A rational evaluation on an investment project forms the basis of a right investment decision-making. The discounted cash flow method (DCF method) is usually used as a traditional evaluation method for a project investment. However, as the risk investment is influenced by many uncertainties, DCF method cannot take into account these uncertainties and often underestimates the value of an investment project. The uncertainties of the risk investment project reflect that the investment have certain option characteristics. Based on the full analysis of option characteristics of the risk investment project, in terms of option pricing theory and method, the investment evaluation model for the risk project is established, and the effect of non-market random risk events on the value of the investment project is also taken into account.