CORPORATE FINANCE                                                             ASSIGNMENT
                        MBA-2 (FINANCE )

                        LONDON SCHOOL OF COMMERCE

                                  UNIVERSITY OF WALES INSTITUTE CARDIFF

                                    STUDENT NAME – MOHAMMAD NOOR

                                            STUDENT ID –L0745GGMH0210

                                              LECTURER –DR. Gerald Pollio

                                Drive 4 Less,UK

(1) PATROL CAR OPTION

|             |             |             |             |Petrol option   with subsidy Enacted                       |             |             |
|             |             |                             |                           |                           |   |                             |
|0             |             |20,000       |             |                                                       |   |             |             |

(2)

|             |             |                     |             |Petrol option without subsidy enacted                       |             |             |

| | | | | | | | | | | | | | | | | | | | | |year | |   initial       outlay (£) | |Cash flows( £) |DCF@10% | |Present value | |0 | |20,000 | | | | | | | | |1 | | | |6000 | |0.909 | |5454 | | |2 | | | |6000 | |0.826 | |4956 | | |3 | | | |6000 | |0.751 | |4506 | | |4 | | | |10,000 | |0.683 | |6830 | | | | | | | | | | | | | | | | | |present value   | | |21746 | | | | | | | | | | | | | | | | | |Net present value(NEN ) | |1,746 | | |

Expected NPV of petrol option

Expected NPV   = NPV (EN)* 40% + NPV (NEN)* 60%
                          =       1063*40% + 1746*60%
                          =       425.20+1047.60
                          =       1472.80

HYBRID CAR OPTION

(3)
                                        Hybrid car subsidy enacted   | | | | | |
|                           |   |                           |... [continues]

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