The Concept of Net Domestic Investment Refers to

question 8

Multiple Choice

The concept of net domestic investment refers to

• A) the amount of machinery and equipment used up in producing the GDP in a specific year.
• B) the difference between the market value and book value of outstanding capital stock.
• C) gross domestic investment less net exports.
• D) total investment less the amount of investment goods used up in producing the year's output.

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Definitions:

Abandonment Option

A financial decision allowing companies to cease a project or investment to avoid further losses.

NPV

Net Present Value; a calculation used to assess the profitability of an investment, considering the present value of its cash flows.

Variances

Differences between planned financial outcomes and actual results, used in budgeting and financial management to analyze performance.

Abandonment Option

A form of real option in capital budgeting, giving a company the ability to abandon or terminate a project during its life if it becomes unprofitable.