Advancement to the Real Option Models in Valuing R&D

Bellalah (2003b) followed the context of Merton (1987) and firstly incorporated the information cosat into the real option model (ROM) in valuing R&D. However, the information cost though affecting R&D's market value has no infulence to R&D's payoff . we extend Bellalah's models as to allow exogenous factors to infulence R&D's payoff. We also made discussion on the individual effects of each factors and the real level of information cost which were not addressed by Bellalah.