Analysis firm's optimal investing time and scale of emerging technology based on the real option approach

This paper relaxes the assumptions of infinitely expiration of investing options and random walk of prices in standard real option based on the analysis of emerging technology investment projects.A real option model has been established to value the emerging technology project,and the optimal investing time and the optimal capacity have been provided to discuss the effect of risk and expiration.Using a numerical example,the conclusions are validated and an analysis about degree of influence is presented. The results show that:to the emerging technology project which has finitely expiration,for low levels of risk an increase in risk accelerate the investment time and decrease the capacity of investment,while for high levels of risk an increase in risk delay the investment time and increase the capacity of investment. In addition,an increase in the expiration time can accelerate the investment time,while has no effect on the capacity of investment.