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Abstract: In this paper, we present a fuzzy linguistic ontology payoff method for the valuation of real options in the aerospace industry. Using real data, we apply the fuzzy linguistic approach to determine the credibility measures and the credibilistic expected value for the fuzzy real options valuation payoff method. This approach is used to obtain a multi-scenario modeling process by envisioning three scenarios: optimistic, most likely, and pessimistic. In addition, our experience with the scenario estimates is premised on results in an operating profit forecast. This forecast corresponds to a plausible outcome within the aerospace licensing maintenance, repair, and overhaul market and provides a decision-making tool. This tool can be utilized for determining real options for project valuation of aerospace licensing revenues based on unit costs, recurring costs, and quantity of units sold. [Copyright &y& Elsevier]

Real option is synonymous with financial flexibility. Traditional valuation has always ignored this flexibility and has provided inappropriate estimate of the projects for decisions. This paper tries to capture different types of real options and their valuations. The Black-Scholes model as suggested by many researchers can be applied only to European option, but in this paper studies that have valued American option using Black-Scholes approach with slight modification are also found. The binomial lattice model is an alternative to value American option, but to avoid complexity binomial tree is more preferred. Given the priori probabilities, decision tree approach provides a simplistic method to value real options. [ABSTRACT FROM AUTHOR]