Your firm has capital stock of $15 million and a depreciation rate of 10%.Gross investment is $2.5 million.How much is net investment?
A)$13.5 million
B)$2.5 million
C)$1.5 million
D)$1.0 million

Question

Quizplus · Accepted Answer

Net investment is calculated by subtracting depreciation from gross investment. Depreciation is 10% of $15 million, which is $1.5 million. Therefore, net investment is $2.5 million - $1.5 million = $1.0 million.

Your Firm Has Capital Stock of $15 Million and a Depreciation