This assignment explores the business case and requirements for setting up a factory for the design and production of a new type of car battery. In doing so, many factors have to be taken into consideration, such as the effect on the environment and society, as well as the risks and opportunities involved. This assignment will also contain weekly problems that the students have to resolve.

Financing

You had received $200,000 as inheritance from relatives which have passed on. You have skillfully invested this in stocks which give you 5% annual dividend and 5% annual growth. Your funds now amount to $400,000.

Bank loans are available to you up to $5,000,000 at 5% interest rate if they consider you a low risk customer, or 10% if they consider you a medium risk customer. The bank will not give you a loan if they consider you a high risk customer.

Investors are interested in financing your operation. They are willing to give you $2,500,000 but they want 50% ownership of your product and warehouse. They are also willing to lend you $2,500,000 at 3.5% interest rate.

The rate of inflation is 5%.

Question: at this point, do you feel you should go ahead with your plans to mass-produce the enhanced battery or should you simply keep your money in stocks? Why?