1. Michael is an Internet service provider. On December 31, 2015, he bought an existing business with servers and a building worth $400,000. During 2016, he bought new servers for $500,000. The market value of his older servers fell by $100,000. What was Michael’s gross investment, depreciation, and net investment during 2016? What is Michael’s capital at the end of 2016?

2. Lori is a student who teaches golf on the weekend and in a year earns $20,000 after paying her taxes. At the beginning of 2016, Lori owned $1,000 worth of books, DVDs, and golf clubs and she had $5,000 in a savings account at the bank. During 2016, the interest on her savings account was $300 and she spent a total of $15,300 on consumption goods and services. The market value of her books, DVDs, and golf clubs did not change. How much did Lori save in 2016? What was her wealth at the end of 2016?