An example of overcapitalization is the following: Company ABC is a construction company earning $200,000 with a required rate of return of 20%. ... Also, the excess capital means that the company will have a higher valuation and can claim a higher price in the event of an acquisition or merger.
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An example of overcapitalization is the following: Company ABC is a construction company earning $200,000 with a required rate of return of 20%. ... Also, the excess capital means that the company will have a higher valuation and can claim a higher price in the event of an acquisition or merger.