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Wednesday, February 17, 2010

Profits as Pay for use of Capital

One of the most important and major purposes of capital is to compensate the millions of owners, proprietors, partners or shareholders for the use of the capital they have invested in a business. Profits also must compensate them for taking the risk in them, that capital may be lost should the business fails. If it were not from this hope of compensation, few people would want to invest in a business.

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