Abandonment Value

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Abandonment Value

The value of an asset if it were sold immediately and all debts associated with it were repaid. That is, the abandonment value is what would be left over after an asset is sold and all the bills were paid. It is also called the liquidation value. See also: Market Price.
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Linking formal financial abandonment models developed by Robichek and Van Home (1967, 577-89), Dyl and Long (1969, 88-95), and Joy (1976, 1225-28) to criminal behavior models created by Becker (1968, 169-217) and Ehrlich (1973, 521-565), Cloninger (1981, 494-504) shows that abandonment is financially attractive if the abandonment value (insurance) exceeds the net present value of expected cash flows over the remaining expected life of an asset.