The price an asset would sell for in an open market between willing parties.
For example, an equipment appraiser determines that a 3-year-old CNC machine has a fair market value of $65,000 — the price a willing buyer would pay a willing seller in a normal arm's length transaction — which the lender uses to calculate the maximum loan amount.
Why it matters: It is the baseline for negotiations, taxation, and lending, ensuring assets are priced realistically in an open market.
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