Explanation:
Data provided in the question
Building worth = $400,000
The new servers purchase cost = $500,000
And, the older serves fell by $100,000
So by considering the above information
1. The gross investment is
= The new servers purchase cost
= $500,000
The depreciation is
= Older serves falling value
= $100,000
And, the net investment is
= Gross investment - depreciation
= $500,000 - $100,000
= $400,000
2. Now the value of Michael capital at the end is
= $400,000 - $100,000 + $500,000
= $800,000