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Question
Explain the following term/concept:
Fixed capital
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Solution
Fixed capital is capital used to buy fixed assets that are used for a longer period of time in the business. These assets are not meant for resale. In simple words, fixed capital refers to capital invested in acquiring fixed assets. It stays in the business for a long period, almost permanently. Examples of fixed capital are capital used for purchasing land and buildings, furniture, plants and machinery, etc. Such capital is required at the time of the establishment of a new company.
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