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Basic Concepts & the Circular Flow · Question 38 of 72

Question 38

HardOriginal question

A factory had capital worth ₹500 crore on 1 April. During the year it invested ₹80 crore in new machines and its old machines depreciated by ₹30 crore. What was its capital on 31 March?

Options for question 38

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Net investment = gross investment − depreciation = 80 − 30 = ₹50 crore.

  2. Closing capital = opening capital + net investment = 500 + 50 = ₹550 crore.

Worth noting

₹580 crore adds gross investment and forgets that ₹30 crore of the old capital wore out.

Concept
A flow changes a stock
Typical time
100 s
Your time
—
The rule this testsStocks and flows
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Ten questions from Basic Concepts & the Circular Flow, at your own pace.

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