Core Model of the Forestry Investment Project Decision Support System Based on the Real Option

Abstract

The forestry investment project has the typical characteristics such as the flexibility, phases, uncertainty, and so on, and needs reasonable applicable decision method and decision support system. The traditional forestry investment project evaluation mostly adopts the net present value method, and ignores option property of the forestry investment project, which is easy to cause the decision-making bias and erroneous judgment. This paper analyzes the real option characteristics of the forestry investment project from the perspective of real option, constructs the analysis model of real option based on the binomial tree theory, and applies the instance to verify. The instance proves that forestry investment project decision will be more scientific based on the real option model. Finally, on the basis of this model, the forestry investment project decision support system is preliminarily studied.