Research Of Mining Investment Decision Theory And Method Based On Real Option Theory

The investment in mining industry is time-consuming and irreversible, and has high level of uncertainty which engenders opportunity value of the investment. The traditional decision-making of investment in mining industry has a lot of weaknesses. For example, it is difficult to set a proper discount rate; the estimation of cash flow is often inaccurate; the management involved is not flexible. As a result, it ignores the real option value of such investment and underestimates the true value, which in turn inevitably leads to wrong decisions.Based in the theory of real option, this thesis studies the decision-making of investment in mining industry in the context of uncertainty and the assessment model as well. It provides new thinking and new approaches to decision-making in mining industry investment.This thesis mainly consists of the following work:1. It examines the position and significance of mining industry in our national economy. It sums up the key problems in the development of mining industry in China. It indicates the content and significance of the studies in this thesis.2. It reviews the historical theoretical studies option and summarizes the classification and pricing methods for real options. It reviews application studies condition on real option both at home and abroad with emphasis put on its application in mining industry and points out the key issues for future studies.3. It analyzes the characteristics of mining industry investment and...