The Decision-marking Research Of Project To Invest With Real Option Theory

The traditional method of investment decision-making is discounted cash flow method (DCF), and the net present value (NPV) is an impotent represent method of it. A number of investment decision-makers always use this method, because it takes into account the time value of cash flow, and is easy to understand. It is proper to use the traditional method when the economic environment is stable, and the future cash flows of the company can be expected. But it is difficult to apply the traditional method, when the investment risks and the uncertainty of enterprises future earnings are increased. The real options method which appears in the 1970s, overcomes the shortcomings of the traditional method. It can identify the uncertainty in the investment projects, and it can calculate the value of uncertainty using its pricing methods.This paper mostly has a research for the real options application of decision-making in enterprise investment projects. After the research of the theory analysis of real options, an innovative ideas map is made, which can give a comprehensive and clear decision-making idea for business investment decision-makers, and is able to make the right investment decision making. The research object of this article is based on the exploitation for growth gearbox of wind power investment projects, and then it puts forward an advice to combine the B-S option pricing model with the Monte Carlo simulation, which proves the feasibility in the demonstration. It also files a mean with Crystal Ball software to simulate the fluctuated rate using Monte Carlo principle, because the fluctuated rate of the underlying asset for investment projects is difficult to assess.In this paper, the study of real options methods is not negative the traditional methods of investment decision-making. Real options method can make a more complete evaluation for the investment project value, and enhance the evaluation of scientific rationality, so it can be said that it is supplementary for the traditional method, and an improvement for the traditional method. At the same time, if the B-S option pricing model and the Monte Carlo simulation are combined, it also can combine the advantages of the two, because it allows the fluctuated rate of underlying asset value to be assured of accuracy and can quickly and easily calculate the uncertainty value. In short, the proposed real options can help the enterprises decision-maker obtain more comprehensive information for decision-making, discover new profits and increase the enterprise value.