If managerial flexibility is high and the project faces significant uncertainty about costs and benefits, then the real options approach to IT investment is the appropriate approach to evaluate the investment.

The correct answer is that the statement is true. When managerial flexibility is high and a project encounters significant uncertainty regarding costs and benefits, the real options approach becomes particularly valuable in evaluating IT investments. This methodology allows decision-makers to treat investment opportunities as options, which can be exercised or delayed based on the evolving circumstances of the project.

In scenarios marked by high levels of uncertainty, the ability to adapt to new information and changing market conditions is crucial. Real options analysis provides a structured framework for valuing the flexibility associated with these investments, enabling management to make informed decisions about when to invest, expand, contract, or abandon a project based on actual performance and market feedback. This way, projects can be assessed not only on projected returns but also on the potential for strategic decisions that arise over time, effectively managing risk in uncertain environments.

In contrast, standard investment appraisal methods may not sufficiently capture the dynamic nature of such investments, making the real options approach particularly relevant under these conditions.