Abstract: Using option game method,it is explored that how the investment growth option affects the debt financing decision of firm.Consider some important factors such as the interest rate,taxrate,interest rate of debt and termstructure of debt,which affect firm's debt financing and investment decisions,the option game theory model of the relation between debt financing and real investment growth option is constructed in uncertainty in this paper.The paper presents the optimal debt capacity,and by numerical analysis shows the non-linear "U" shape relation between debt capacity and growth option.The research shows that when the "U" shape relation states that the rate of return on investment is lower,the optimal debt capacity is decreasing with the rate of return on investment; when the rate of return of investment is at higher level,the optimal debt capacity is increasing with the rate of return on investment.Thus,a new interpretation of the relation between debt financing and real investment growth option is also given.

Key words: option game, capital structure, debt capacity, growth option