Final answer:
Dave's gross income from lending $100 to Bob and receiving $105 after one year is $5, as this is the interest earned on the loan.
Step-by-step explanation:
The question refers to the concept of gross income in financial terms. In the example provided, Dave loans $100 to Bob and after one year, Bob repays Dave $105. The $5 that Bob pays over the original amount is considered interest income.
Gross income is the total income received before any deductions or allowances are made. In this scenario, Dave's gross income from the loan is $5, which is the interest earned.
Using the simple interest formula given in Step 3 of the reference information, Simple interest in this example is $5.