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Appears in Information Systems Research, Vol. 10, No. 1, pp. 70-86, 1999. A CASE FOR drill REAL OPTIONS PRICING ANALYSIS TO EVALUATE INFORMATION utilize science PROJECT INVESTMENTS Michel Benaroch Associate prof of Information Systems inform 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 channel South Minneapolis, MN 55455 Tel: 612-624-8562, Fax: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The fare of fundamental woof determine poses (OPMs), such(prenominal) as the binomial and the Black-Scholes models, to problems in breeding technology (IT) investment decision making feature been the work of some debate in the last a couple of(prenominal) years. front seek, for example, has made the case that pricing in truthistic options in real world ope rational and strategic settings offers the potential for reclaimable 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 literal real world examples, and have always concluded with caveats and questions for future research about the applicability of such methods in practice. This news report makes trey important contributions in this context: (1) it provides a nominal hypothetical grounding for the validity of the Black-Scholes option pricing model in the context of the spectrum of capital budgeting methods that might be sed! ulous 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 discount measure out that are similar to those implied by traditional capital budgeting methods such as discounted cash flow analysis; and (3) it presents the first application of the Black-Scholes model that uses a real world...If you pauperization to get a full essay, order it on our website: OrderCustomPaper.com

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