Thakkar's initial decision was to pursue a business plan that had a trading capacity of 45,000 units per year, but the actual production had to be based on market demand. Thakkar estimated that, ultimately. 29,250 units could be sold per year at an average price of $2,200 per unit. Nipponply could produce 29,250 units with 65 per cent capacity utilization (i.e., the lowest level of capacity). For the second and third year. Thakkar estimated that Nipponply would have 38.250 units and 45,000 units with 85 per cent capacity utilization (a moderate level of capacity) and 100 per cent capacity utilization (the highest level of capacity), respectively. The initial investment in the project would cost $29.965 million, of which $21.915 million would be drawn from the firm's own resources; the rest would come from a bank loan at an interest rate of 11 per cent (see Exhibit 7). The life of the project was estimated to be fifteen years. The salvage value of the IT infrastructure, plant, and machinery at the end of fifteen years would be negligible and therefore could be ignored. The salvage value of the building machinery at the end of fifteen years would be $250,000. EXHIBIT 3: EXPENSES RELATED TO THE VOLUME OF SALES PER MONTH (FOR 3,750 UNITS) Particulars Amount (#) Manufacturing cost 6,682,500 Advertising expense 65,000 Promotional expense 82.500 Electricity expense 82,500 Total expenses 7,012,500 Source: Created by the case author based on company documents. EXHIBIT 4: ESTIMATED INVESTMENT Particulars Amount (7) Information technology infrastructure 1,575,000 Plant and machinery 1,250,000 Building 26,100,000 Other miscellaneous assets (i.e., inventory) 200,000 Total investment 29,125,000 Source: Created by the case author based on company documents. EXHIBIT 5: ROUTINE EXPENSES PER MONTH Particulars Amount (7) Administrative costs 20,000 Office supplies 5,000 Electricity 40,000 Miscellaneous 5,000 Total monthly expenses 70,000 Source: Created by the case author based on company documents. EXHIBIT 6: PERSONNEL COSTS PER MONTH Employee Designation Number of Employees Amount (#) Regional sales managers 3 1,080,000 Business development managers 3 720,000 Sales executives 6 864.000 Office assistants 3 288,000 Total monthly personnel costs 2,952,000 Source: Created by the case author based on company documents. EXHIBIT 7: CAPITAL STRUCTURE Source Amount (7) Equity 21,915,000 Debt (bank loan) 8,050,000 Total capital 29,965,000