When you decide to set up a factory there is need to select machinery. You might go with latest machine or a used machine. It will totally depend on the capital you have. You can make a sheer mistake of buying highly automatic machine, but in the process you might eat upon a large capital base. You can be in problem if you do not save enough for working capital. Remember that you would be making money from selling products. So more the working capital, more will be the products and hence more sale.
But at the same time, there is also a thumb rule - higher the capital cost, lower the running cost, unless there is technological breakthrough in machinery. So, if you have enough money, you should surely go for latest machine. Just make sure that your total ( bank + own) capital is sufficient to fund the machinery & plant cost while still keeping enough for working capital. If you end up using 60-70% capital in machinery, very little remains for working capital. Usually you should also have some reserve fund, so you can survive for more time.
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