A business spends $10 million on new capital equipment, and during the same year, $7 million of its existing capital wears out. Which of the following is correct?
A) The firm's gross investment is $7 million, and its net investment is $10 million.
B) The firm's gross investment is $3 million, and its net investment is $7 million.
C) The firm's gross investment is $7 million, and its net investment is $3 million.
D) The firm's gross investment is $10 million, and its net investment is $3 million.
Correct Answer:
Verified
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