In January 2010, Tim owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 per cent. During 2010, Tim spent $200,000 on new machines. During 2010, Tim's gross investment totalled
A)$900,000.
B)$300,000.
C)$1 million.
D)$200,000.

Question

Quizplus · Accepted Answer

Gross investment refers to the total amount spent on new capital. Tim spent $200,000 on new machines, which is his gross investment. The decrease in value of existing machines does not affect the calculation of gross investment.

In January 2010, Tim Owned Machines Valued at $1 Million