Valuation of Information Technology Investments as Real Options
نویسندگان
چکیده
منابع مشابه
Valuation of Information Technology Investments as Real Options
This article describes a methodology for evaluating information technology investments using the real options approach. IT investment projects are categorized into development and acquisition projects depending upon the time it takes to start benefiting from the IT asset once the decision to invest has been taken. A couple of models that account for uncertainty both in the costs and benefits as...
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As real options analysis (ROA) is being applied to increasingly complex information technology (IT) investment problems, a concern arises over the use heuristic ROA models that are simpler to apply but can produce overvaluations. A good example is the application of a heuristic nested variation of the Black–Scholes (BS) model to the evaluation of interrelated IT investments as nested options. T...
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Investments in IT have become a dominant part of the capital budgets of many organizations. While the costs seem readily identifiable, many of the benefits are elusive. As a result decision makers are faced with difficult questions: How should IT investments be designed and managed to ensure alignment with corporate strategy? How should such investments be prospectively justified? What more (th...
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This paper investigates the connection between market valuation anda type of the merger (stock, cash) using real options setup. I solveexplicitly for the timing and terms of cash mergers in two deferent settingsto demonstrate that cash mergers generally occur at low marketvaluations, whereas stock mergers that may be observed at both low andhigh valuations; the result holds with some dierences ...
متن کاملA Case for Using Real Options Pricing Analysis to Evaluate Information Technology Project Investments
The application of fundamental option pricing models (OPMs), such as the binomial and the Black-Scholes models, to problems in information technology (IT) investment decision making have been the subject of some debate in the last few years. Prior research, for example, has made the case that pricing “real options” in real world operational and strategic settings offers the potential for useful...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2000
ISSN: 1556-5068
DOI: 10.2139/ssrn.246576