Manager Bob oversees the operation of a cotton ginning facility in South Texas. One of the gins is 30 + years old and needs to be phased out, this represents which of the following types of investment?

Question

Business

Grumpy

19 August, 02:41

Manager Bob oversees the operation of a cotton ginning facility in South Texas. One of the gins is 30 + years old and needs to be phased out, this represents which of the following types of investment?

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Answers (1)

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Miss Piggy · Answer 1

The answer is: Reinvested income

Explanation:

Generally when a company will invest in replacing a fixed asset (new machinery or factories, office renovations, new vehicles, etc.) it reinvests income. It can also do it by getting a loan (or bonds) or issuing new stock, but most companies will prefer the first option.

Reinvested income (or retained earnings) are earnings from your company's operations that you use to keep your business running and competitive. Usually a company will not spend all its profit on bonuses and dividends, it usually retains a part to reinvest in the company's operations.