What Is The Difference Between Net And Gross Investment?

I am an executive blurter.


Answer:
What does the word gross mean in this context? It indicates that investment includes all investment merchandise produced. Gross investment is not adjusted for depreciation, which measures the amount of capital that has be used up in a year. Thus gross investment includes all the machines, factories, and houses built during a year even though some be bought simply to replace some old capital goods that burned down or be thrown on the scrap heap.

If you want to get a judge of the increase in society's capital, gross investment is not a sensible measure. Because it excludes a compulsory allowance for depreciation, it is too large too gross.The same point holds for capital. To find the net increase contained by capital, you must start with gross investment and subtract the deaths of income in the form of depreciation, or the amount of capital used up.

Thus to estimate capital formation we means net investment. Net investment is always births of capital smaller amount deaths of capital. Net investment equals gross investment minus depreciation. I think this answer will give pleasure to this question to some extent.
Comment: Thank you sir
Answer: I want to equal points to differentiate this topic

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