If gross investment is 160 crore and net investment is 95 crore, what is depreciation?
Answer and explanation
Correct answer: 65 crore
The relationship is net investment = gross investment − depreciation. Rearranging it gives depreciation = gross investment − net investment. Therefore, depreciation = 160 − 95 = 65 crore. Adding the two figures would be wrong because depreciation is the replacement component contained within gross investment, not an amount to be added to gross investment to obtain the depreciation figure.
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What is the correct answer to this question?
65 crore
Why is this the correct answer?
The relationship is net investment = gross investment − depreciation. Rearranging it gives depreciation = gross investment − net investment. Therefore, depreciation = 160 − 95 = 65 crore. Adding the two figures would be wrong because depreciation is the replacement component contained within gross investment, not an amount to be added to gross investment to obtain the depreciation figure.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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