The Project Evaluation Based On NPV And Options

In this paper, two methods about project evaluation: NPV and real options approach are introduced first. For NPV method, we introduced its present situation and problems which is at home and abroad, as well as introduction of its basic principles, shortcomings, and the scholars' improvements on NPV cash flow uncertainty. For real option approach, in the paper we introduced its present situation and existing problems which is at home and abroad , and introduced the basic principles and related properties, as well as introduction of the recent theory and application of research results. Finally two methods was introduced in a complementary role, but also the problems that exist in a combination of both. The paper is written in this perspective. In a combination of both, first we introduced a new real options NPV method in the absence of options, This method is for evaluating projects of the different risk characteristics, in this kind of project evaluation, we should calculate risk discount rate of different risk resources, because the traditional capital asset pricing model would have systemic errors in this situation. In addition, we introduced the method to calculate fuzzy options.we combined the real options NPV and fuzzy options in a organic way. By doing so, we developed a fuzzy project Evaluation method for the non-sophisticated projects based on delayed options; relating to the discount rate of mature projects, as mature projects' variables are relatively easy to predict, and the risk characteristics of the project is the same or similar as the enterprise's project characteristics. So we can estimate the overall discount rate using historical data and it can be applied to this mature project. We introduced D-CAPM and improve it in this paper. First of all, we add punishment factor to it which used to reflect the influence of extremes. Secondly, considering up-side receipts. It showed that the improvement is right and practical. Then we formed a project evaluation approach based on cash flow uncertainty and delayed options. In considering a number of variables are uncertain variables, now qualitative analysis becomes even more important. At this time, we should compare and judge in a qualitative way, at last, we combined the NPV and qualitative analysis and drew a different category results.