Real Option Approach to Decision-making in Project Investment and its Application Evaluation

Real Option Approach considers soft management as options in the project investment and is more applicable to the analysis of decision-making problems of the project investment under the uncertain conditions as compared with the traditional net present value method.The article firstly discloses the defaults of the traditional net present value method and reveals the improvements in the real option approach,and then enumerates the types of the real option approaches and proposes the construction of the project investment decision-making models based on real option,and in the end,evaluates the application of the real option approach in the decision-making process of project investment.