Gross Investment is defined as the total expenditure or investment that is made by a company to acquire capital goods.
Gross investment is the gross value for such an expenditure and it does not take into consideration the factor of depreciation (which is wear and tear of an asset over its useful life).
Net Investment is calculated by subtracting the value of depreciation from the gross investment.
If the value of gross investment is higher than the depreciation at any given time period, it means that the net investment is positive and the capital stock has increased.
Similarly, if the gross investment value is less than the depreciation, it suggests that the net investment becomes negative, which leads to decline in capital stock.
This article was all about the topic of Gross Investment, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.
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