| Article ID: | iaor200971668 |
| Country: | United States |
| Volume: | 55 |
| Issue: | 11 |
| Start Page Number: | 1877 |
| End Page Number: | 1896 |
| Publication Date: | Nov 2009 |
| Journal: | Management Science |
| Authors: | Gamba Andrea, Fusari Nicola |
| Keywords: | capital budgeting |
We provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system. Within the framework developed by Baldwin and Clark (2000), we implement a valuation approach using a numerical procedure based on the least-squares Monte Carlo method proposed by Longstaff and Schwartz (2001). The approach is accurate, general, and flexible.