[kpommerenke]

It's not really $200k in income. That number ignores the initial investment (and thus its associated cost of capital) as well as the economic depreciation of the machines (since you have to replace them after, say, 25 years). As I calculated in a different comment, the actual economic profit is negative.

[dingaling]

If you're considering depreciation then you don't need to account for the initial imvestment, just the financing costs thereof. You're adding an asset and depreciating it, rather than considering it as 'money spent'.

[kpommerenke]

The initial investment (and its associated cost of capital) is quite separate from economic (as opposed to accounting) depreciation: if you could get a valuable asset for free (doesn't matter how) whose market value falls every year thereafter, you have no initial investment and thus no cost of capital. However, you have economic depreciation. On the other hand, if you buy a valuable asset that maintains its value forever, you have a cost of capital, but no economic depreciation. In real life, you have both for most assets. As an aside: the financing cost of the initial investment is irrelevant. What matters is the opportunity cost: what profit (or return) could you have made by investing the money in a different asset of the same risk instead (which is the cost of capital)?

[thaumasiotes]

No, the initial investment is negligible. Article has the high end of brand-new machines at $8k.

It's not $200k in income because you have to stock the machine.

[rightbyte]

But you subtracted the wage if I remember correctly. I would consider the wage as a profit.