Slick math !

Call it good fortune but I have a choice of road to take, while returning home (Delhi) from office (Gurgaon). In my usual impulsion, I decided to examine these two choices and derive a financial value to it. Incidentally, I found yet another way of distinguishing the value investing and DCF methodologies of stock picking.

Enclosed are the specs :

Option 1 : NH-8
Distance to travel : 25 kms
Tollgate cost : Rs. 16
Time taken : 55 mins

Option 2 : MG Road
Distance to travel : 29 kms
Tollgate cost : Nil
Time taken : 40 mins

At 45.44 rupees per litre and excluding value of time, the math is in favour of MG Road because my Suzuki swift gives about 14 kms to the litre. Thats about rupees 3.24 per kilometer. So the additional 4 kms is justified by the saving of Rs. 3.04 I get, when I take MG Road over NH-8 (16 minus (4*3.24)). This is a bit like Graham, working the its and bits of every stock around practical and simple formulae.

The DCF methodology will drive (no pun intended) me insane. Additional elements DCF will prescribe include reduction of mileage over time, road conditions, increase in travel time, engine maintanence cost, time of travel etc. ... extrapolate it with friendly-neighborhood MS Excel over a 5 year period, calculate the PV .. and charge me a bill of a few thousand dollars for a job well-done. Phew !