Question

Distinguish between gross investment and net investment.​

Answer 1

Answer:

Key Difference: Gross investment refers to the total expenditure on buying capital goods over a specific period of time without considering depreciation. ... Net investment is also related to gross investment. It is basically gross investment minus the depreciation on existing capital.

Explanation:

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Answer 2

Explanation:

Gross investment comprises of the total expenditure incurred on capital goods (such as plants, machinery, etc.).While, net investment refers to the total value of investment in the capital goods after taking account of depreciation. It is calculated by subtracting depreciation from gross investment.

Thus, we can say that the only difference between gross investment and net investment is that, while gross investment includes depreciation, net investment does not. That is, Algebraically,

Net Investment = Gross Investment – Depreciation....

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