Option 1 -> Gross Investment includes both new capital formation and replacement of worn-out capital.
Option 2 -> Interest on capital is a return on investment, not a component of investment itself.
Option 3 -> Net Investment excludes depreciation/replacement investment (Net Investment = Gross Investment - Depreciation).
Option 4 -> Investment Expenditure is a general term and doesn't specifically indicate inclusion of replacement investment.
Hence, Option 1 (Gross Investment) -> Gross Investment is the total investment in an economy which includes both Net Investment (new capital formation) and Depreciation (replacement investment). The formula is: Gross Investment = Net Investment + Depreciation. Replacement investment represents the expenditure needed to replace worn-out, obsolete, or depreciated capital goods to maintain the existing capital stock. -> correct