Ask Question
BusinessBusiness
24 January, 19:29

At the start of the year, your firm's capital stock equaled $100 million, and at the end of the year it equaled $105 million. The average depreciation rate on your capital stock is 20%. Gross investment during the year equaled A) $1 million B) $5 million. C) $7 million D) $25 million

+5
Answers (2)
  1. 24 January, 19:40
    0
    The answer is D.

    Explanation:

    Net investment equals Gross investment minus depreciation.

    Net investment equals Investment at the beginning of the year minus Investment at the end of the year.

    Net investment = $105 million - $100 million.

    Net investment = $5million.

    Depreciation = 20% of investment at the start of the year

    = 20% of $100million

    = $20million.

    Gross investment is therefore,

    $5million + $20million

    =$25 million
  2. 24 January, 19:50
    0
    Option D,$25 million is the correct answer.

    Explanation:

    The net investment formula can be used to compute gross investment by changing the subject of the formula as shown below:

    Net investment = gross investment minus depreciation

    Net investment = Closing capital stock minus opening capital stock

    closing capital stock is $105 million

    opening capital stock is $100 million

    net investment=$105 million-$100 million=$5 million

    Gross investment is unknown

    depreciation=opening capital stock * depreciation %

    depreciation=$100 million*20%

    =$20 million

    $5 million=gross investment-$20 million

    gross investment = $5 million+$20 million

    gross investment = $25 million
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “At the start of the year, your firm's capital stock equaled $100 million, and at the end of the year it equaled $105 million. The average ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
If the rate of inflation is higher than your interest rate on your savings account you are losing buying power true or false?
Answers (1)
Mattel Inc.'s 2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,022 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $109,491 thousand.
Answers (1)
Which of the following are examples of primary sources? - the choices are. A. Analysis of results of a survey conducted by another company. B. Notes from your last meeting. C. Chapter in a textbook. D.
Answers (1)
Mary recently purchased a boutique. When she bought the boutique, its market value and book value were equal. Included in the purchase were the building, fixtures, and inventory.
Answers (1)
If an informal work group views management as a threat the group will more than likely?
Answers (1)
New Questions in Business
At the end of 2016, Nash's Trading Post, LLC has accounts receivable of $635,600 and an allowance for doubtful accounts of $23,140. On January 24, 2017, it is learned that the company's receivable from Madonna Inc.
Answers (1)
United Birdseed is expected to pay the following dividends over the next three years: After year 3, dividends are expected to grow by 5% per year forever. The expected/required return on United Birdseed stock is 10%. What is the stock price?
Answers (1)
Halestorm Corporation's common stock has a beta of 1.13. Assume the risk-free rate is 4.8 percent and the expected return on the market is 12.3 percent. What is the company's cost of equity capita?
Answers (1)
A monopoly creates a deadweight loss to society because it produces less output than the socially efficient level. a. true b. false
Answers (1)
A company sells two products with information as follows: A B Sales price per unit $12 $22 Variable cost per unit $10 $10The products are machine made.
Answers (1)
Home » Business » At the start of the year, your firm's capital stock equaled $100 million, and at the end of the year it equaled $105 million. The average depreciation rate on your capital stock is 20%.
Sign Up Forgot Password?