Question

Is a multiple use power generating machine owned by a factory, sunk capital or floating capital? Give two arguments to support of your answer.

Answer 1

Multiple-use power-generating machines owned by a factory are Floating capital.

1. No Salvage Value Outside Specific Use: The power-generating machine is likely to have little or no salvage value outside its intended specific use within the factory that owns it. This lack of flexibility in use means that if the factory were to close down or need to sell off assets, this machine would not easily convert back into liquid capital.
2. Non-transferability: It can be transferred from one line of production to another. A power-generating machine, especially one tailored for specific factory operations or integrated into the facility, is often designed to meet specific energy needs and configurations. This customization makes it less likely to be usable in another setting or by a different owner without significant alterations or loss of value.