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Appears in Information Systems Research, Vol. 10, No. 1, pp. 70-86, 1999. A CASE FOR drug abuse REAL OPTIONS PRICING ANALYSIS TO EVALUATE INFORMATION use science PROJECT INVESTMENTS Michel Benaroch Associate prof of Information Systems coach 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 alley South Minneapolis, MN 55455 Tel: 612-624-8562, Fax: 612-626-1316 Email: rkauffman@csom.umn.edu ABSTRACT The guess 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 stimulate been the work of some debate in the last hardly a(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 efficacious 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 existing real world examples, and have always concluded with caveats and questions for future day research about the applicability of such methods in practice. This musical composition makes trey important contributions in this context: (1) it provides a stately hypothetical grounding for the validity of the Black-Scholes option pricing model in the context of the spe ctrum of capital budgeting methods that migh! t be industrious 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 open fire measure out that are similar to those implied by conventional 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 indirect request to get a full essay, order it on our website: OrderCustomPaper.com

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