Applied Research of Real Option on the Project Valuation

Project evaluation in the process of investment decision-making is of great significance. This paper makes use of Ibbotson extension method to calculate the risk discount rate, and then evaluates NPV of the project. It puts forward an improved method aiming at the lack of real options and resorts to Monte Carlo for the volatility simulation of option, and finally realizes the sensitivity analysis of option value under the factors´ disturbance. By comparative study, the reliability and rationality of the real options for project valuation is further proved, which provides a reliable basis for investment decisions.