The net investment flow (rate of capital formation) of the giant conglomerate LTF incorporated is projected to be million dollars/year in year t.Find the accruement on the company's capital stock in the second year. Hint: The amount is given by
A)$0.92 million
B)$0.12 million
C)$2.45 million
D)$2.24 million

Question

The net investment flow (rate of capital formation) of the giant conglomerate LTF incorporated is projected to be  million dollars/year in year t.Find the accruement on the company's capital stock in the second year. Hint: The amount is given by 
A)$0.92 million 
B)$0.12 million 
C)$2.45 million 
D)$2.24 million

Quizplus · Accepted Answer

The accruement on the company's capital stock in year 2 is given by: 
Accruement = Net investment flow * (1 + Net Investment Flow Rate) 
Substituting the given values, we get:
Accruement = 11eb12b0_a974_7e7b_b394_235ddf0ae079_TB7866_11 * (1 + 11eb12b0_a974_7e7b_b394_235ddf0ae079_TB7866_11) 
= 11eb12b0_a974_7e7c_b394_b11e29f360a8_TB7866_11 
= 2.24 million dollars 
Therefore, the correct answer is D) $2.24 million.

The Net Investment Flow (Rate of Capital Formation) of the Giant