Question : Which of the following is a correct expression?
Option 1: Depreciation = Net investment - Gross investment
Option 2: Gross investment = Net investment - Depreciation
Option 3: Net investment = Gross investment - Depreciation
Option 4: Net investment = Gross investment + Depreciation
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Correct Answer: Net investment = Gross investment - Depreciation
Solution : The correct option is Net investment = Gross investment - Depreciation .
Depreciation is subtracted from Gross investment to determine net investment. Depreciation is the term used to describe how capital assets lose value over time as a result of deterioration, obsolescence, or other causes. Conversely, gross investment is the entire amount of money used to buy new capital assets or raise the value of already-owned ones.
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