The Reseach Of Value Evaluation In TOT Of City Water Suplly Based On Real Options Theory

Along with the innovation of public industry of China, the government encourages public enterprise to sale whole or part of property to other investment organization to improve the efficiency of operation and management. In the process of TOT(Transfer-Operation-Transfer),the value of public enterprise is very important to make success in the first"Transfer". Nevertheless, city water supply enterprise TOT project's transfer financing is huge, it's period for callback cost is long, and it commonly is divided into several stages. But those traditional value evaluation methods ignore the value that the flexibility of the project bring out, so in many instances this will lead to distortion of the project's value. The real options method has background advantage in evaluation of uncertain project, so we can use this method to remedy the limitation of traditional methods. So under this background, it is meaningful to study how to apply the real options theory to evaluate the real value of city water supply enterprise TOT project, and it is meaningful to prove the success of TOT projects.This paper deeply reseaches the application of real options method in the evaluation of water supply TOT project, and analyzes the character of real options that city water supply TOT project has. On the other hand, this paper analyzes the key parameters of the real options model. In the end, the paper uses an example to prove the feasibility and advantage of the real options method.There are three parts in the paper:The first to the third chapters comprise the first part which comprises the main contents of theory.The forth chapter comprises the second part. This part objectively analyzes the real options characters of city water TOT project. Based on real option model ,this part analyzes the growth options of city water TOT project.The fifth to the seventh chapters comprises the third part. This part comprises the main contents and the process of application of an actual example, then shows the problem when use the real options method. At last the paper put forward the research plan in the future.