In 2001 your firm's capital stock equaled $10 million,and in 2002 it equaled $15 million.The average depreciation rate on your capital stock is 20%.Net investment in 2002 equaled

Question

Quizplus · Accepted Answer

Net investment is calculated as the change in capital stock minus depreciation. The change in capital stock from 2001 to 2002 is $15 million - $10 million = $5 million. Depreciation for 2002 is 20% of $10 million, which is $2 million. Therefore, net investment is $5 million - $2 million = $3 million.

In 2001 Your Firm's Capital Stock Equaled $10 Million,and in 2002