Aries plc was recently formed and issued 80 million £0.50 shares at nominal value and loan capital of £24 million. The business used the proceeds from the capital issues to purchase the remaining lease on some commercial properties that are rented out to small businesses. The lease will expire in four years’ time and during that period the annual operating profits are expected to be £12 million each year. At the end of the three years, the business will be wound up and the lease will have no residual value.

The required rate of return by investors is 12 per cent.

Required:

Calculate the expected shareholder value generated by the business over the four years, using:

(a) the SVA approach

(b) the EVA^® approach.