Real option characteristic and economic analysis of project investment

Through the symmetry relation to financial options; the pricing characteristic of real options in project investment is studied, value models of real. options are established, critical conditions of investment projects are given and the difference between the real, options approach and the net present value approach in the evaluation of the project value is analyzed. The result indicates that the investment critical value calculating based on the real options approach, which implies the compensation value for the investment uncertainty, is bigger than the net present value. Furthermore, all parameters of real options value models are analyzed and the influence actions of all factors in project investment and management policy decision are given.