| In the process of world economy development, the traditional project investment decision methods, like NVP, supply effective ways to evaluate projects for the managers who make the decisions whether invest or not. It's no doubt that the traditional means of evaluating project have made great dedication to corporations' investment.However, the environment is changing now, lots of new industries appear. The uncertainty faced by the company investment is becoming much bigger. As the premise and hypothesis of traditional project investment decision methods that make means work is challenged strongly. Especially in the evaluation of projects which have high risks such as R&D project or venture capital project, the traditional evaluation methods can't make nicety and effective analysis for the firms. The emergency of real options theory shows a new way to make better evaluation for the projects with high risks and big uncertainty. The theory regards all kinds of investment chances and management flexibility included by the projects as options to make analysis, which could evaluate the real values of projects much better. Managers can control the project conditions more objective and more flexible, which possibly avoid the potential risk damage and get more benefit.In this article, on the basis of introduction of real option theory, it compared real options project evaluation means with traditional project evaluation means to describe the advantages of real options theory while using several typical cases to give concrete introduction. At the end of article, it gave several suggestions to solve the problems which appear in the real options theory application. The article is organized as follows:Chapter1: Gives Introductions of this article's creative points and shortage, the structure and article's studying background.Chapter2: Discusses the real options theory, mainly about its concept, characteristics and category, while introducing the economic models which are used for evaluating the real options price.Chapter3: Illustrates how the real options project investment means apply, how to set the price of the real options in the projects and the sensitivity analysis of the real options evaluation means.Chapter4: Compares the real options evaluation means with the traditional investment project decision methods in order to introduce the merits of the real options evaluation means.Chapter5: Discusses application of the real options evaluation means with several typical cases.Chapter6: Analyzes the problems in the application of the real options evaluation means and giving some suggestions. |
