Explore BrainMass

capital investment

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Carefully explain the difference between the term "investment" as used by economists and the way it is used in everyday life. Use this to explain the major components of investment in the GDP accounts and why they are classified in this way. If a firm buys a ream of paper for a copier, which will be used within a year, how does this count towards investment?

© BrainMass Inc. brainmass.com October 24, 2018, 8:53 pm ad1c9bdddf

Solution Preview

When economists talk about investment they are referring to capital investment. This generally refers to firms buying new buildings, infrastructure, materials, etc. It also includes new real estate construction. In everyday life when people say investment they are usually referring to personal savings and financial markets. Economists refer to this as savings. However, the money ...

Solution Summary

A summary of capital investment is embedded.

See Also This Related BrainMass Solution

Working capital management

1. What factors determine the size of the investment a firm makes in account receivable? which of these factors are under the control of the financial manager?

2. How does the level of liquidity that a firm maintains affects its value?

3. What are the disadvantage and advantage of offering a discount for early payment?

View Full Posting Details