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- Title
ABANDONMENT VALUE AND CAPITAL BUDGETING.
- Authors
ROBICHEK, ALEXANDER A.; VAN HORNE, JAMES C.
- Abstract
The article focuses on optimal capital budgeting design and the inclusion of abandonment value within the decision-making process. The assumption that investment projects should be treated as a whole, considering their entire economic life-cycle as one unit, is rejected. The possibility of profitable abandonment within capital budgeting is asserted and discussion is given regarding its potential impact on a project's risk and expected return values. Simulation models are presented to reformulate abandonment into traditional capital management structures.
- Subjects
CAPITAL budget; PRODUCT elimination; INVESTMENTS; MATHEMATICAL models of capital investments; DECISION making; FINANCIAL management
- Publication
Journal of Finance (Wiley-Blackwell), 1967, Vol 22, Issue 4, p577
- ISSN
0022-1082
- Publication type
Article
- DOI
10.2307/2326002