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MachineShop
Jan 13, 2017 06:05 PM 0 Answers
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Equipment generally depreciates over time. Typically in 3-5 years the equipment may have no value especially if its technology like computers and printers. Anyone who purchased a computer 5 years ago can attest to the price to buy the same computer today. So what type of equipment and what’s the expected life expectancy of the equipment is important to know. If you are only purchasing a piece of equipment for $20,000 then you should understand that the IRS would allow you to take off the entire amount under section 179 in the year you purchased the equipment. Thus you would have a big writeoff . It appears that you lack funds since you are looking for an investor for a $20,000 piece of equipment. The issue then becomes your status. If you need the equipment to continue in business then you may have to make a deal you don’t like or is a bad deal to continue in business. Someone with terrible credit can buy a machine and pay 180% interest/year and someone with good credit can buy the equipment with 0% financing for 1 year. Generally if someone is receiving 6% of the gross they would receive that until the $20,000 is returned and then receive something additional for lending the money in the form of interest, equity, continued royalty etc.

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