At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's gross investment for the year totaled

Question

Quizplus · Accepted Answer

Tom started with 5 machines, scrapped 2, and purchased 3 new ones. Therefore, his net investment for the year is 1 (3 new machines purchased minus 2 scrapped machines). However, the question is asking for gross investment, which includes both purchases and disposals. So, the total number of machines that were either added or removed from Tom's inventory during the year is 3 (2 scrapped machines and 3 new machines). Therefore, the correct answer is D, 3 machines.

At the Beginning of the Year, Tom's Tubes Had a Capital