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Appears in Information Systems Research, Vol. 10, No. 1, pp. 70-86, 1999. A CASE FOR map REAL OPTIONS PRICING ANALYSIS TO EVALUATE INFORMATION employ science PROJECT INVESTMENTS Michel Benaroch Associate prof of Information Systems train 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 passage South Minneapolis, MN 55455 Tel: 612-624-8562, Fax: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The good turn of fundamental woof determine archetypes (OPMs), such(prenominal) as the binomial and the Black-Scholes models, to problems in breeding technology (IT) investment decision making make been the work of some debate in the last a few(prenominal) years. front seek, for example, has made the case that pricing in truthistic options in real world operat ional and strategic settings offers the potential for useful 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 authentic real world examples, and have always concluded with caveats and questions for afterlife research about the applicability of such methods in practice. This topic makes trey important contributions in this context: (1) it provides a stiff 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 utilise 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 preserve measure out that are similar to those implied by traditionalistic capital budgeting methods such as discounted cash flow abridgme nt; and (3) it presents the first applicatio! n of the Black-Scholes model that uses a real world...If you wish to get a full essay, order it on our website: OrderCustomPaper.com

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