Calculate Michael’s gross investment, depreciation , and net investment

Question

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Answer 1

Question

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

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not use ai please

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

Answer 2

Question

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

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Answer 3

Question

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

Answer 6

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000

Thus, Michael’s net investment is equal to $400,000.

Answer 7

Chapter 7, Problem 1SPA

To determine

Calculate Michael’s gross investment, depreciation, and net investment

Answer 8

Expert Solution & Answer

Explanation of Solution

The total amount of money spent on the new capital is gross investment. During the period of 2015, Michael has purchased $500,000 of new servers. Thus, the gross investment in 2018 is $500,000. At the same time the market value of older servers falls by $100,000. That means the depreciation of the older servers is $100,000. Since, the gross investment is $500,000 and the depreciation is $100,000, the net investment can be calculated as follows.

Net investment=Gross investment−Depreciation=500,000−100,000=400,000