Real Options Approach In Project Decision-making In The Venture Capital Research

The venture investment in our country is at the stage of elementary to some developed countries, and some researches are not consummate. As the peculiarity of venture investment, some traditional valuation methods always disabled in using to venture investment project. The lag of valuation method to venture investment baffle the developing it, so it is very important to find a effective method to value a venture investment project.The theory of real option is one of greatest inventions in Finance in 19th century, the principle and method can use to deal with many macroscopical and microcosmic economics. When option theory be used to analyze some real assets, the real option theory produces. The real option theory consider some agilities in a investment as a series of option, it reduces much disadvantage of traditional value methods, and accommodates the venture investment project's trait. It is a good method to value this type of projects.This paper summarize the application of traditional value methods and their disadvantage. It analyses some intrinsic multistage compound real option models, and then set up a new and suitable model. Concretely, this paper consists of five chapters:Chapter One summarizes the paper's background, recommends the research actuality of real option's application in the venture investment decision, introduce the purpose to research and innovation.Chapter Two analyses the traditional means to value the venture investment project and its localization. It introduces the conception of venture investment project, and then recommends some traditional value methods, lastly appraises their shortcoming.Chapter Three mainly analyze the valuation method of real option and the feasibility of its application in the venture investment project. It firstly introduce the notion and principle of real option, and then construe the real option's characteristic, in the end fetch out the idea of multistage compound real option.Chapter Four is the core of the paper, in the first instance, it analyzes some models of multistage compound real option, and then their deficiency, lastly it puts forward author's model.Chapter Five is the case, it analyze its value with traditional methods after introduce the case's background, and value it with the author's model, at last it compares the results of the two methods. It can reflect the preponderance of real option methods, at the same time, it can also reflect the model's feasibility.