Real Option Analysis on Coal-to-oil Project

As Coal-to-liquid project is in face of lot uncertainties largely due to the wide fluctuation of oil industry, it is unableto evaluate this project accurately via the traditional NPV analysis method. The paper tries to app ly real optionsanalysis approach to evaluate this Coal-to-liquid project, simulate the fluctuation of oil price by a designed softwareand also compare the operating value and the value of waiting to invest in this Coal-to-liquid project.