The methodology is proposed to value a project based on real options model firstly. Then the BOPM is used to value a project and the empirical results are compared with the results which are based on NPV approach. The results favor the application of the real option theory and show that the option value have important role on investment decision. The results show that the real option approach is more rational than the traditional NPV approach in valuing project because the uncertainty is considered in real option approach. The uncertainty with respect to project return has a substantial effect on investment decision, which is only explained by the option theory.
This paper uses the real options approach to conduct research on the coal resources development investment decision by literature studies, the combination of theoretical research and practical research. It has carried on the systematic overall retrospect to the domestic and international research results about real option. It introduces and analyzes the real option theory on the basis of analyzing and appraising to the traditional investment methods systematically in detail. This paper has studied the value of the investment project again with the real option theory. It sums up the application area, step and analyzing frame of real option theory, and analyzes the insufficiency of the traditional investment decision on the basis of comparing with traditional coal resource investment decision, and proposes some improvement suggestions.
This paper combined with the real conditions on investment and decision-making of grid construction. Considering the uncertainty of project, we applies real option theory into evaluation model of grid construction and establishes evaluation model of grid construction based on real option theory. The result indicates that proper application of real option method into the investment decision-making model of grid construction can better enable grid to obtain profit from investment uncertainty, which provides larger profit and opportunity for grid corporation.
The methodology is proposed to price the land in China based on real options model. The results from the option-based model in this research favor the application of the real option theory in land prices and have important role on investment decision. The results show the following conclusions: Firstly, the empirical results show the uncertainty with respect to built asset return has a substantial effect on increasing land prices, which is only explained by the option theory. Secondly, the asset price and the size of city have positive role on increasing the land price from. Thirdly, the risk-free interest rate affects option prices in two opposite direction. Lastly, information of the previous period has a very strong effect on the next period's land price.
Study on the timing of investment decision of real estate projects based on the real option theory