Research On The Method Of Project Investment Decision Based On Option

The traditional investment methods, such as net present value method (NPV) have been occupied the central position in project investment decision. But with the development of our country market economy, enterprises are faced with increasing uncertainties. NPV often neglects the flexibility value of investment projects, underestimates the total value of project, and may be lead to the errors of project investment decision. Based on the related research status in domestic and aboard, the model of project investment decision based on the basis of the option is studied systematically by analyzing the disadvantage of the traditional investment methods. The main work and research results are as follow:(1) Compared the traditional investment decision with option investment decision, it is demonstrated that real option is reasonable and scientific.(2) On the assumption that the asset value conforms to the geometry Brown movement and other conditions, an investment portfolio, consisting of the asset value,the option of project investment, has been structured and a basic model of project investment decision based on option has been set up.(3) On the basis of basic model, this thesis suppose that interest rates conforms to the geometry Brown movement. An investment portfolio, consisting of the asset value,the option of project investment and riskless bond, has been structured and a stochastic interest rates model of project investment decision based on option has been set up.(4) On the basis of correlative data, it is tested that the changing pattern of coal price...