Abstract

Under the current agricultural conditions of shortage of funds, the traditional evaluation methods, such as the net present value (NPV) method, do not account for flexibility or uncertainty. Real Options Approach (ROA) rises from the doubt of NPV method, and can make up for it in evaluating agricultural venture capital projects. This thesis analyses the limitations of the traditional evaluation methods and the significance of Real Options Approach to investment evaluation of agricultural venture capital projects, and illustrates the application of Real Options Approach to investment evaluation of agricultural venture capital projects with Binomial Option-Pricing Model and Black-Scholes Option-Pricing Model.

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