In January 2017, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2017, Tim spent $200,000 on new machines. During 2017, Tim's net investment totaled
A) $1 million.
B) -$300,000.
C) $200,000.
D) -$100,000.

Question

Quizplus · Accepted Answer

The initial value of the machines was $1 million, which fell by 30% (a decrease of $300,000), resulting in a value of $700,000. Tim then spent $200,000 on new machines, bringing the total value to $900,000. Thus, the net investment is the final value ($900,000) minus the initial value ($1 million), which equals -$100,000.