What Does the Concept of Net Investment Refer To

question 30

Multiple Choice

What does the concept of net investment refer to?

• A)The amount of capital stock used up in producing the current year's GDP.
• B)The difference between the book value and the replacement value of all capital stock.
• C)Gross investment less exported capital goods.
• D)Total investment less the amount of capital goods used up in producing the year's output.
• E)The amount of depreciation plus the amount of new investment during a given year.

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Definitions:

Retained Earnings

Profits that a company has chosen to reinvest in the business rather than distribute to shareholders as dividends, accumulated over time.

Hurdle Rate

The project cost of capital, or discount rate. It is both the rate used in discounting future cash flows in the net present value method and the rate that is compared to the internal rate of return.

Intrinsic Value

The actual value of a company, asset, or currency determined through fundamental analysis without reference to its market value.

Risk-Adjusted

Pertaining to the modification of financial analysis or return on an investment to account for the risk involved, ensuring a more accurate assessment of performance or value.