Company X does not raise any new finance during the year, but it generates a lot of

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Company X does not raise any new finance during the year, but it generates a lot of earnings during the year, which are immediately reinvested. If you were calculating X's return on capital, would it make more sense to use capital at the start of the year or an average of the starting and ending capital? Would your answer change if X made a large issue of debt early in the year? Illustrate your answer with simple examples.
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Fundamentals of Corporate Finance

ISBN: 978-0078034640

7th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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