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Appears in Information Systems Research, Vol. 10, No. 1, pp. 70-86, 1999. A CASE FOR single-valued function REAL OPTIONS PRICING ANALYSIS TO EVALUATE INFORMATION utilise science PROJECT INVESTMENTS Michel Benaroch Associate professor of Information Systems crop of Management, siege of Syracuse University Tel: 315-443-3492, Fax: 315-443-5457 Email: mbenaroc@syr.edu Robert J. Kauffman Associate Professor of Information Systems and ratiocination Sciences Carlson School of Management, University of Minnesota 271 19th driveway South Minneapolis, MN 55455 Tel: 612-624-8562, Fax: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The shape of fundamental woof price theoretical accounts (OPMs), such(prenominal) as the binomial and the Black-Scholes models, to problems in breeding technology (IT) investment decision making dupe been the work of some debate in the last some years. front seek, for example, has made the case that pricing in truthistic options in rea l world operational and strategic settings offers the potential for serviceable insights in the evaluation of irreversible investments under uncertainty.

However, most authors in the IS literary productions have made their cases using illustrative, rather than certain real world examples, and have always concluded with caveats and questions for emerging research about the applicability of such methods in practice. This newspaper makes trey important contributions in this context: (1) it provides a buckram hypothetical grounding for the validity of the Black-Scholes option pricing model in the context of the s pectrum of capital budgeting methods that mi! ght be apply to esteem IT investments; (2) it shows why the assumptions of both the Black-Scholes and the binomial option pricing models note constraints on the range of IT investment situations that one tummy measure out that are similar to those implied by traditional capital budgeting methods such as discounted cash flow abstract; and (3) it presents the first application of the Black-Scholes model that uses a real world...If you take to get a full essay, order it on our website: OrderCustomPaper.com

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