Analysis Of Real Option Pricing Theory And Application In R&D Management

This dissertation is supported by Scientific Research Program of Hebei Province Education Office (Research of Corporation Real Option Theory and Techniques).How to make Research and Development (R&D) decision under uncertainty is a very essential problem in the practice and theory of management. Existing quantitative analysis method and qualitative analysis are not effective to solve the R&D investment because it is a long-term and strategic investment project. Real option theory can put more flexibility to R&D investment as it take all factors which can have effect on R&D management into account.The purpose of the dissertation is to analyze real option pricing theory and the application in R&D in-depth, based on the framework of option pricing and the similarity between real option and option. This paper mainly includes: 1. The postulate of option, it introduced the quality of option, the factors that influenced the value of option and the option pricing theory. 2. Real option pricing theory, this chapter summarized real option pricing method based on the similarity between real option and option. 3. Real option and R&D, this chapter analyzed the similarity between real option and R&D, summarized method to solve the R&D investment. 4. The application analysis of real option, this part analyzed option to defer, option to expand, option to abandon, option to switch and compound option in R&D investment.The application in R&D in this paper is not a simple deny but an improvement to to the tradional investment decision-making method. It overcame weakness and added rationality to investment decision-making. The research in this paper provided decision-making with scientific base and meaningful reference.