| Abstract: | According to the real option theory, this paper establishes an urban steel enterprise whether and when to relocate investment evaluation model. Several economic uncertainty factors (product prices, main raw material cost and fuel cost) have been taken into account in the model. Then the model is solved by Least Squares?Monte?Carlo?simulation?method. Using this model, this paper analyzes the investment value, probability of?investment?profit and the optimal investment time. Through?concrete cases?and?sensitivity?analysis examines the effect of several economic uncertainty factors on these indicators. Study shows that the project has some value, immediate?investment?is?best,?but?the?risk?is?too big; product prices drift parameter increases will significantly improve the project investment value, increase the probability of investment profits, deferred optimal investment time. |
