Question

Explain gross and net investment.

Answer 1

Answer:

Gross investment is the amount a company has invested in an asset or business without factoring in depreciation. Factoring in depreciation creates net investment.

For example, a company buys a car for $5,000 that has depreciated by $3,000 after three years.

Net investment is the amount spent by a company or an economy on capital assets, or gross investment, less depreciation. Net investment helps give a sense of how much money a company is spending on capital items used for operations, such as property, plants, equipment, and software.

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Answer 2

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=> Net investment is also related to gross investment. It is basically gross investment minus the depreciation on existing capital. ... Thus, gross investment is the total amount spent on goods in order to produce other goods and services, whereas net investment is the increase in productive stock.✌️