B u s i n e s s M a c r o e c o n o mi c s , T u t o r i a l 7M . P . : M a c r o e c o n o mi c s , 9hE d . C h a p t e r 7T UT ORIAL 7:CHAPT ER 7:F INANCE, SAVING, AND INVESTMENTClass P roblems And Applications1.Michael is an Internet service provider. On December 31, 2007, he bought an existing business withservers and a building worth $400,000. During his first year of operation, his business grew and he boughtnew servers for $500,000. The market value of some of his older servers fell by $100,000.a.What was Michael’s gross investment, depreciation, and net investment during 2008?b.What is the value of Michael’s capital at the end of 2008?2.Lori is a student who teaches golf on the weekend and in a year earns $20,000 after paying her taxes. Atthe beginning of 2007, Lori owned $1,000 worth of books, CDs, and golf clubs and she had $5,000 in asavings account at the bank. During 2007, the interest on her savings account was $300 and she spent atotal of $15,300 on consumption goods and services. There was no change in the market values of herbooks, CDs, and golf clubs.a.How much did Lori save in 2007?b.
