The Assessment of the Risk of Investment Projects Based on System Dynamics

From the point of the cash flows, we use the systematic, comprehensive and dynamic conception to analyze the critical factors influencing the project investment risk and to establish the system dynamics model of cash flows, then analyze the model simulation and analyze the experimental results. This paper uses risk-adjusted discount rate method to yield the project risk-adjusted discount rate according to the approximate value beta of investment project, then get to the adjusted net present value according to the risk-adjusted discount rate using system dynamics. The application of system dynamics methodology in project investment risk assessment is helpful to research the risk of the project and discusses the influence on the project which the risk factors cause to make the investment project risk of enterprises more reliable.