Retirement Planning & Employee Benefits. Supplementary Workbook Dr Shivani Rajan Shirsat CERTIFIED FINANCIAL PLANNER CM 1. Mrinal 25 years old, employed with an MNC since last six months is aware of the importance of financial planning. She has opened a fixed deposit account in a bank to accumulate funds for her retirement. She has decided to invest the Rs.70000 per year for this till her retirement at the age of 60 years. She is looking at a lifestyle after retirement that fits into a fixed Rs. 4lakhs p.a. spend for 20 years. What is the corpus required at the time of her retirement and is her savings sufficient to take care of her retirement needs? Assume a rate of 6%p.a earned on her funds after retirement. (Assume all funds required at the beginning). The current Fixed deposit rate is 8%p.a a. Rs.48,63247, Yes Rs.1,20,62176 b. Rs.48,63247, Yes Rs.1,30,27150 c. Rs.45,87968, Yes Rs.1,20,62176 d. Rs.45,87968, Yes Rs.1,30,27150 Solution A Pmt = 400000, n =20, I =6%, mode = begin, PV =4863247 Pmt = -70000, n=35, I =8%, mode = begin, fv = 12062176 2. Suresh Kumar retired from XYC Ltd. After serving for 30 years 9months. Salary at retirement was Rs.15500 pm, while average salary drawn for the preceding 10 months was Rs. 10800pm. The actual amount of gratuity received by him at the time of retirement was Rs 335000/-. Calculate the amount of gratuity exempt from tax, assuming that Rajesh is covered by payment of Gratuity Act 1972? a. 315000 b. 175673 c. 181730 d. 277212 Solution D As he is covered under the gratuity act the amount of gratuity as calculated by the act will be exempt subject to a max of 350000/-. 15/26 X 15500 X 31 = 277211.54 3. Rajkumar is 32 and plans to retire at 60 years. According to the calculations of his financial planner he will require inflation adjusted Rs.150000 at the end from the first month after retirement. Inflation is 5%p.a. & return on investment is 7%p.a. What’ll be the corpus at the time of retirement in order to meet this? Will Rajkumar’s corpus be enough to fund his retirement if he saves Rs. 4lakhs pa. ? (End of year). Life expectancy 85 years. a. Yes, Rs. 35779618 b. Yes, Rs. 32279076 c. No, Rs. 32279076 d. No, Rs. 35779618 Solution D Inflation adjusted rate = ((1.07/ 1.05)-1/) x 100 = 1.904761905 /12 = 0.1587301587 Mode = end, n = 25 x 12 = 300, I = 0.1587301587, pmt = 150000, PV = 35779618 N = 28, mode = end, pmt = -400000, I = 7%, FV = 32279076 4. A perpetual bond of Rs.10000 is selling at Rs. 9500. The coupon rate is 12.5% and the discounted rate is 15%. What’ll be the value of this bond and YTM? a. Rs. 9500 & 15% b. Rs. 9660.67 & 15.59% c. Rs.8333 & 13.157% d. Rs.8000 & 13.571% Solution C Value of a perpetual bond = pmt / I = 1250/15% = 8333; YTM = 1250/9500 = 13.15789% 5. Mr. Ashay 30 years wants to retire at 60; he has a life expectancy of 75 years. Current expenses are Rs.200000 annually. He estimates no reduction of expenses post retirement. How much should he save per annum to achieve his target, if inflation is 6% and yield from investment is 10%. He does not wish to leave an estate. a. Rs 153475 b. Rs.143789 c. Rs 128954 d. None Solution A = 153475 Fv of expenses; n = 30, mode end, I = 6%, PV = -200000; FV = 1148698.235 Mode = begin, n = 15, I = 3.773584%, pmt = 1148698.235, PV = -13465941 Mode = end, n = 30, I = 10%, FV = 13465941, pmt = 81862.79 6. Bimla is working with zonal international as an accountant for the last 12 years. To supplement her earnings she was doing part time assignment in partnership entity DFC associates. She retired from both at 60 years and received Rs. 3lakh and Rs. 1 lakh as gratuity from Zonal International & DFC. In the previous year. What is the maximum amount of gratuity received by her which is exempt from tax? Both the organizations are covered under the payment of gratuity act. a. Rs. 3lakhs b. Rs. 3.5 lakhs c. Rs.1lakh d. Entire 4 lakh is exempt since it is received from 2 employers. Solution B = 3.5 lakhs As per the gratuity act 1972, gratuity received from by an employee from more than one employer in the same previous year the maximum amount of gratuity exempt from tax u/s 10(10)(iii) cannot exceed Rs 350000/7. How is past service defined under EPS 1995? Solution: The past service under the EPS scheme means the period of service by a member Benefits received Gratuity Rs. Gross worth d. Solution C 12. 7 days wages b.36000. Rate of wage to be paid to a seasonal employee. 120000/. Vaishali is working with F ltd from October 1 1995. 8. 1500pm. Net loss c. Net worth b. Vaishali contributes Rs. She was entitled to 40 days leave for every completed year of service.e. Got 50% of her pension commuted in lumpsum w. under payment of gratuity act is a. a. What will be the amount of uncommuted pension for Vaishali that will form part of her total income for Ay’09 –’10? st st st st Pension scheme Retirement Scheme Superannuation Retirement income scheme . 6500 per month.e. Encashment of earned leave for 150 days Rs. c. ____ of a client is simply the excess of assets over liabilities.f. a. 26 days wages Solution: C 10.900 per month to RPF to which her employer contributes an equal amount. Gross loss Solution: A 9. 7 days wages d. Payment from recognized PF Rs. Rate of wage to be paid to a monthly rated employee. Pension from Jan 1 ’09 Rs. 95000. under payment of gratuity act is.as commuted pension. 15 days wages d. 30 days wages c. A scheme providing pension benefits as per IT provision is called ____ a. 250000. 15 days wages b. up to 15 – 11 -1995 as a member of the erstwhile Family Pension Scheme. b. April 1 ’09 and receives Rs. d. 26 days wages Solution: C 11.before the eps became effective i.____ for each completed year of service or part thereof in excess of six months. She is entitled to a basic salary of Rs. DA is 40% of basic salary. 30 days wages c. She retired on Jan 1 2009. 60000 c. actually taken 150 days. What will be the maximum amount of insurance cover payable to his nominee under the EDLI scheme? a. He is entitled to a basic salary of Rs. Actual encashed b. Mr. . Unfortunately he dies in an accident. March 1 ’09. As per act 15 x 30 = 450. 98000.e. None of the above Solution = B Least of 10 x 8400 = 84000 Actual received = 36000 Statutory limit = 300000 15 x 40 = 600days. Pension from Jan 1 ’09 Rs. 6000 Solution A = 4500 Pension received for Jan.36000. Mohan is an employee having an average balance of Rs. 48750 d. 60000 b. Got 50% of his pension commuted in lumpsum w. Benefits received Gratuity Rs. 4500 b. Payment from recognized PF Rs. 2000pm.58% st st st st .a. If nominal rate of interest is 12% and compounding is done monthly what would be the effective rate of return? a.. therefore balance 450 – 450 = 0. What amount of leave encashment is eligible for tax exemption for Manish? a. he was entitled to 40 days leave for every completed year of service. Encashment of earned leave for 150 days Rs. 47250 Solution D 35000 + 25% (70000 – 35000) = 47250 15. 6000per month. 300000. 14.70000 in the PF for the last 12 months. 600 – 150 = 450. 10 months average salary d. Manish is working with Y ltd from October 1 1993. Nil c. Nil c. He retired on Jan 1 2009. 1000 d. Feb. 12.f. & March 13. DA is 40% of basic salary. Given a) Personal consumption of goods & services = 250 Billion. 12.75% Solution C N = 12. 8lakhs pa.56 months. last until 71 years old. He would like to return to India 5 years from now. n = 15. d. & inflation is 5%pa.a how long will his savings last? Assume that Investments earn 6% pa. For the past 10 years and hopes to save for the next 5 years. Interest rate is 9% pa. 45 + 20. He is aged 40. Established that inflation is 3% for the next 30 years. 13064pa. If Kiran could save only Rs. = 0. Rs. B) Government expenditure = 75billion C) Private sector fixed capital expenditure = 50 billion D) Export receipts = 75 billion E) Import expenditure = 80 billion. i = 9%.06/1.682% 16. Life expectancy is 70 years. 370 Billion c. b. FV = 683681.Compounding to be done on annuity certain basis.b. n =251. pmt = 90000. and saving Rs.45000 pa for the first 10 years how much does he need to save for the next 20 years to meet his retirement nest egg? a. The inflation adjusted monthly income requirement for Laxman is Rs. Narayan is working in USA for 10 years. PV = -683681. No. Rs. mode = end. What will be the value of GDP? a. FV = 4500000. 80000 in the year in which he returns to India. I = 12%.20 18. n = 15. c. 12. I = ((1. effective rate = 12. pmt = -45000.61% c. Rs. Mode = end. 98450 Pa. pmt = 13064. lasts until 81 years old b. 79250 pa. FV = 18620775. 12. He is 30 years old and wants to retire at 60.91.96 years.e.91.. 265 billion Solution: B 250+75+50+75-80 = 370 billion 17. Kartik decides to accumulate 45 lakhs when he retires. 90000pm & is growing at 4% p.04)-1)/12.96 = 65. i. I = 6%. n =20. 295 billion d. 85477pa. If the estimated spend for the family is Rs. compounding done on annuity certain basis? a. c. Solution D Mode = end. Rs.8373.160256410. will exhaust before 71 Solution C Mode = end.96 years . I = 9%. pmt = -800000. n = 10.68% d.8373. PV = -18620775. 425 billion b. the afore said limit of Rs. Mode = end. 350000 b. An employee contributes Rs.in the year 2000 of which the entire amount was exempt. If the bond is perpetual the value of the bond is ______.32257 Solution B Mode = end.5200/. All of the above 2. He will receive this pension for 20 years every year end and interest rate is 12% what is the present worth of his pension? a. Ram has received gratuity of Rs. Amount in excess of 12% is included in gross salary. c. 1000 d.5 20.each month with a similar amount contributed by the employer to a recognized provident fund. The amount exempt from tax will be _____ a. Rs. pv= 28859. exactly 10 years from now..350000/. Bond Face value Rs 1000 and coupon rate 9% with market rate is 10%. In the year 2006 he received an additional gratuity of Rs. b. 750 c. PV = 89633. Rs. a. 300000/-. 350000 – 75000 = 275000 If an employee who has received gratuity in any earlier year from his former employer(s). only C & D . n = 10. Exempt upto 12% of salary. d. 75000/. Rs. None of the above Solution B. 300000 d. 1200 Solution A Price = 80/10% = 800 21. receives gratuity from another employer in a later year. Swapnil will start receiving a pension of Rs.12000 pa.28860 c.will be reduced by the amount(s) of gratuity exempted from tax under sector 10(10)(iii) in any earlier year(s) 22. Rs 32323 b. pmt = 12000. 275000 c. FV = 89633. n = 20. I = 12%. Not exempt but also not taxable every year. 900 b.83667 d. I =12%. Mr.19. What is the tax benefit available to the employee on the contributions made by the employer? a. No tax benefits available 1. Exemption upto 12% of salary. 50000/premium were purchased.100000/24.3. Exempt under section 80CCC b. 35000/. An investor buys a pension policy from an insurance company after paying a premium of Rs.in his PPF account. Further insurance policies of Rs. 24000/. How much will be the tax benefit available for the individual? a. An employee wants to decide between contributing a sum of Rs 3500/. A B 4.pm either to the provident fund or the public provident fund. is included in gross salary. Amount in excess of 12% is included in gross salary. While having a deduction of Rs. Only A & B Solution: 2 23. A person has a basic salary of Rs. Interest credited in excess of 9. 94000 d. A C Solution 1 (A B C) 26.5% p. d.a. c.Other insurance premium paid is to the extent of Rs 94000/-.100000. Deduction u/s 80C available on Employee’s contribution from gross total income subject to certain limits b. 24000/. The tax benefit in the two cases for the employee will be _____ a. Interest on Provident fund exempt u/s 10 upto 9. An individual invests Rs 50000/. No exemption available.a. 25. 100000 c.5% p. nil Solution B Rs 100000/The maximum limit of benefits available under section 80C & 80CCC is Rs.during the year as provident fund. What is the total amount of benefit of tax available u/s 80c & 80 ccc? a.per month & there is a provident fund deduction of 10% towards a recognized provident fund. A B C 2. 1. A B C D 3. 118000 b. Exempt under section 80D . What is the tax benefit available at the end of the year? Solution Rs. Jatin is 40 yrs old. The accumulated balance due & becoming payable to an employee participating in a recognized PF shall be exempt in the following cases 1. a.254000/. the service has been terminated a) by reason of such employee’s ill health or b) by the contraction or discontinuance of the employer’s business or c) or other cause beyond the control of the employee.or 2. No tax benefits available Solution C Exempt under section 80C 27. None of the above Solution B As he has completed more than 5 years of continuous service in the company the entire amount received is exempt. though he has not rendered such continuous service of 5 years. Rs 254000 b. 9.8lakhs a year currently. 4lakhs pa. The amount that is taxable is ____. He earns Rs 2. If the employee has rendered continuous service with his employer for a period of 5 years or more .33% b. 28. 80% x 888207.3520. on the cessation of his employment. to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognized fund maintained by such other employer. FV = 888207. 8. I = 8%. at the time of resignation he received a sum of Rs. If his earnings rise 8% for the next 15 years & he wants a replacement ratio of 80%. the employee obtains employment with any other employer.3520 = 710566 29. what will be his requirement at the time of retirement? a.c. The entire amount is exempt c. An employee joined service in May1999 & left it on Jan2006. The current income of a person is Rs. If. By what rate should his income increase to provide such a benefit? a. n = 15. 5lakhs at the replacement ratio of 80% in 5 years time. or 3. If. 710655 d. Exempt under section 80C d..33% . 701655 Solution B Mode = end.33% c. 701555 b. He wants a sum of Rs. NIL.as accumulated balance from recognized provident fund. 7. 710566 c. PV = -280000. in a 8% pa deposit for 270 days then will there be a tax deduction at source on the interest paid? . what should his normal earning be at the time of retirement?____ a.2 lakh b. If there is a deposit of Rs. 5. 10. If the other income after deductions is Rs. 7. 8lakhs Solution D 480000/60% = 800000 32. I = 9.8lakhs at 60% replacement will mean a person has to earn before retirement a sum of ______ a. 6000 b. The pension received by a person is Rs.2 lakhs 31. 6lakhs c. If a person wants a sum of Rs 42000/.d. PV = -400000. 1lakh for a male individual. A sum of Rs.6 lakhs c. 6.pm. 4.33% Solution C Fv =500000/80% = 625000 Mode = end. FV = 625000. 72000 d.4 lakhs d. 4.is taxable. If the income from a senior citizen savings scheme for a 63 year individual is Rs105000/and there is no other income then the amount of -----. 70000/. 500 Solution A 34.33% 30. n = 5. 5000 c. 5lakhs b. a. 12000 c.pm at a replacement ratio of 70%.2lakhs Solution D 42000 x 12/ 70% = 7. Nil b. then the pension received is taxable to the extent of ____ a. 44000 Solution C 6000 x 12 = 72000 33. 10000 d. 6000/. 7lakhs d. not taxable c. 10000 c.100000/. both a & b are correct e. None of the above Solution A 35. A provident fund account is transferred after 4 years of operation to another employer the earning in this case is ____ a. A provident fund account is closed and the amount is withdrawn by the individual after 4 years. Neha received inheritance of Rs 2. there is no bonus on maturity d. A person wants to invest Rs 4 lakhs in a post office monthly scheme. Can’t say d. The amount received here is ______ a. a. none of the above Solution B 38.is invested in a notified pension scheme of a mutual fund --will be allowed as a deduction under section 80c a. What amount she should start withdrawing per month? . Nil Solution A 39. wants to withdraw equal amounts at the beginning of each month for next 7 years at 10%pa compounded monthly. it can be done in a joint name c. Yes c. it can be done in a single name b. only B is correct Solution: D As per the POMIS rules up to 4.5 lakhs can be invested in a single name & up to 9 lakhs can be invested in a joint name 36. not taxable c. An amount of Rs. taxable b. d. none of the above Solution A 37. No b. taxable b. 100000 b.5 lakhs.a. Contributions to pension funds of mutual funds do not qualify for 80C deduction. 5%.24038. FV = 1897471. 25. For Rs.64 = pmt for 40 years. They grow to Rs. 00. 4150 d. PV = 1562031 Savings corpus mode end. Nest egg and saving required will be 25100065 and 541093 resp. n = 15. rate of return 7% . 1687498. No c. d.06% 3. 12.07/1.5x 365/182 =25. 1478597. FV = 585306. pmt = -30000. Yes b. He is expected to live up to 85. n =10 x 12. What is the annualized return? 1. 2266 c.10. No d. She will require 5000 in 1 month after retirement. n = 25. PV = -250000 PMT = 4116 40. 90000 in 182days.5%. 1562027 .04)-1)/12 = . I = 4%.131 42. 1984571. 80000.000. . Nest egg and saving required will be 13785155 and 438781 resp. a. Solution C Find FV45. 12. Y Solution D Retirement corpus pmt = 15000.06% 2. Nirav wants to retire at 45 and he wants to maintain his present standard of living. I = ((1. Nest egg and saving required will be 14773065 and 740530 resp. 30. 25. c. st . None of the above Solution A 10000/80000 = 12. What is the return? b. 4116 b.5%. Will the corpus be enough to fund her retirement if she saves up to Rs.a. 12. Inflation 4% expected return 7% pa . I =7%.5%. b. PV = -325000. 11. What is the corpus required to meet the expenses after retirement. 25% 4. Inflation 4% p. Nest egg and saving required will be 12773065 and 438300 resp. What is the nest egg required at age 45 and what amount shall he save every year to meet this plan? His present investment is Rs. 2626 Solution A Mode beginning.06% 41. i=10%/12.a. Ms. a. How can he achieve this? He is at present 30 yr. Life expectancy is 75 yrs. Madhu is 40 yrs old to retire at 65. He spends 325000 a year.000 pa (at the end of the year) a. Ram has bought the share of ABC ltd. n = 7x12. n = 25. I = 8%. Will the corpus be enough to fund her retirement if he saves upto Rs. Mode = beginning.a. 91613 Solution D Mode = end.13091516. FV = 3509085. 15000 per year (at the end) in Bank FD earning 8.558 44.019230769 / 12. Kalpesh now realizes he can now earn12 % pa on fresh investment and also maintain a saving st . Mira aged 30 saves Rs. Rekha 20 yrs retired at 45. 235789 c. 4378154.1348974. pmt = 91612. rate of return 8% . N c. FV = 1491655. Inflation rate is 5% pa. a. I = 0. PV = -4566431 Saving corpus.01 N= 6%. PV =. I = 3. Y Solution C Mode = end.857142857 / 12. FV = 13785170. N d. 236478 d. n =28.25% P. n = 25 x 12. pmt = 25000. 1491655. 4129874.01. a. pmt = 238615. Prakash is 35 yrs old wants to retire at 60.25%. 4784962. Inflation is 5% p. Mr.a .09%. pmt = 585306. What will be the saving per year required in order to meet this. 87498 c. n =40. PV = -1491655. Life expectancy is 80 yrs. Life expectancy is 80 yrs.000 pa (at the end of the year) a. Compounding to be done on annuity Certain basis. 1491655.88461545. Interest rate 9 % pa. 89458 b.06 43. i = 2.. 4566431. n =22. mode = end. 238615 Solution D Mode = end. 48. FV = 13091516. PV = -1000000.I= 2. compounded annually until she retires at 58. n = 25. n =15. She requires 55000 in the first month of her retirement.37 45. Inflation rate is 4% pa. n = 20 x 12. 50 Lakh when he retires. Pmt = -48000. 137767 d. What is the corpus required to meet the expenses after retirement. After 10 yrs of his saving 45000pa. Y b. PV 45 = 13785170 Savings per year I = 7%. Kalpesh wants to accumulate Rs. He will require 25000 in 1 month after retirement.118 46. He is 30 yrs and wants to retire at 55 yrs. i= 8. Life expectancy is 70. Calculate the Corpus on the date of retirement? What is the fixed amount she can Withdraw at the beginning of each yr until 80 in case she wishes to exhaust her corpus completely. rate of return is 6% pa. pmt = -15000. inflation 5% pa. 232584 b. 1424894. pmt = 55000.64. pmt = 438781. What percentage of his salary should he start saving to achieve his goal.1 Mode = end. Calculate the amount of gratuity exempt from Tax assuming he is covered by provision of Payment of gratuity Act 1972. 1105694. 9800 p. n = 15. Life expectancy is 80 yrs. His salary at retirement was Rs. n = 10.70% d. PV = -1132832. in a saving plan which yields 6% interest pa.200. 1132832. 1054875. Will he be able to accumulate the amount required? What will his corpus be? a.8373.683681.05)^25]/ 0. Comp annually until he retires at 60. FV = 683681.456 Total savings 2490299. N. n = 30. 1132832. 000 . pmt = -45000. The actual amount of gratuity received by him at retirement was Rs.amount of 72000 pa for the rest of the working life. 294000 b. If Manoj intends to prepone his retirement to the age of 55 yrs and needs to have the same amount of accumulated saving as at the age of 60 yrs.m. 6. Y . Pmt = 59040 48.395 4264646. N.325000.456 = 5174438.50 Lakh Solution A Mode = end. 3.06 -0.56% c. 59040 Solution D Mode = end.70% Solution C = 30000 x [(1. While average salary of preceding 10 months worked out to Rs. 14. 52. I =8%. Mode = beginning. Presuming he wishes to leave his heirs an estate of Rs. FV = 2490299. pmt = -10000. Krishna aged 30 saves Rs. 61375 b. a.05)^30] / (0. I =9%.74 Lakh b.04% b. 10000 per year (at the end) in Bank FD earning 8% p. FV = 1132832. Manoj 30 yrs employee earning salary of Rs.500 p.05 =47096. FV = 2684139. 181730 .06)^30 – (1. 108423 d.06 – 0. a.1 + 2684139. n =15. PV = .75 Lakh c. FV = 200000. pmt = -72000. I = 1. 12787 c. I = 9%. His Salary increases by 5% pa.395 = x [(1. Y.m. 51. He started saving 10 % of his salary. 10. n =20.32336 / 300000 = 15. a.06)^25 – (1. 49. I = 12%.88%.556 47. at the end of the year.a.05) = 4264646.698% 49. 15. mode = end.5 Lakh d. Ramesh retired from PTC completed service of 29 yrs 9 month. Corpus on the date of retirement? What is the fixed amount he can withdraw at the beginning of each yr until 80. 300000.32336 47096.8373. 48.Inflation rate is constant at 6% pa. FV = 1897471. FV = 383932.9671. After 3 yrs ROI is 6% compounded quarterly. 1897471. PV = -72000.6875. 1945875. 315000 d. 383932 d. 175673 Solution B Covered under the gratuity act therefore gratuity exempt will be least of actual received. 140000 b. n = 25. 199145 Solution A Mode = end.a. n = 4. a.9504 51. 4 % for next four year value of the car is expected to fall by 10 % every time over a period of 4 yrs. a. . n = 3 X 2. As inflation is constant we will use nominal rate of 7% in post retirement phase. comp annually until he retires at 60.9671. 192712 d. I = 7%. PV = -101311.2304. n = 7. FV = 101311.2304. 155000 c. Presuming he wishes to leave his heirs an estate of Rs.Inflation rate is constant at 5% pa. n = 4. I = 5% / 2. Shinde invested Rs. Fv = 364651. a. The inflation rate for the period are expected to be 5% for 1 four year. FV = 158241. PV = -300000. 158242 Solution D Mode = end. st . Ram aged 35 saves Rs. I = 5%. 242337 b. or calculated as per the act as 15 X 10500 X 30 = 181730 26 50. I = 6% / 4. 150. He wants to estimate the amount he may need to buy the car in 8 yrs time. 214598 c. 400000 c. n = 5 x 4. After 7 yrs the ROI is 5% compounded half yearly.c. PV = -117489. Life expectancy is 70 yrs. Corpus on the date of retirement? What is the fixed amount he can withdraw at the beginning of each yr until 70. 345539 b.8750 PV = -328186. I =5%. 2147854. What will he get after 15 years. If he buys the car in 8 yrs then what would be the same real amount that he would need to have saved. Amount needed as value of car will reduce by 10% = 345539 52. 72000 at the rate of interest of 5%. Currently he would buy the car of his dreams for Rs.000. 1745897. Harinder has heard that changes in inflation rate might have a significant impact on his real saving.300000. 30000 per year (at the end) in Bank FD earning 7% p. 148251 d. max limit Rs. FV = 117489. I = 4%. 426591 Solution A Mode = end. 3 Lakh. Jan-2006 to 28-Feb-2006 is Rs. 16.81%. & 6. 350000. 400000 c.0656 N =10. PMT = 242337 th 53. What would be household expenses required at age 60 yrs if to maintain standard of leaving is 80% post retirement.652 Retirement expenses = 80% x 1971288. 341142 d. He received a gratuity of Rs. PV = -1050156. If Mr. I =5%.300.81% 55. a. 200.788. Amit aged 30 yrs has an estimated present expense of Rs 360. 6% in next ten years. Salary during 1. 2002 & 31/12/2003. 350000. 11. n = 10.He receives cash dividend Of Rs 200.PV = -1897471.a. 750000. PV = -586402.and has worked for 26 yrs and 5 month in the organization calculate the tax free and taxable amount of gratuity resp. Kalpesh could save only .5% for rest of the years. Besides he receives Rs. 10. An employee retires on 10 Mar 06.5 lacs.15300 IRR =12. 26000 pm.750000/. I =7%.53% Solution A Cash flow -10000. is exempt gratuity therefore balance 400000 is taxable 54. 6.May-2005 to 31-Dec-2005 is Rs. As payment is least of 350000.pm. PV = -360000. d.300. 26500 pm. b. 2001.000p.If inflation is 5% in first ten years. FV= 1050156.Assume interest rate 9% and inflation 5% compounding to be done on annuity certain basis. FV= 586402. 1.300 on31/12/2000. actual received or as calculated Least is 350000.788 N= 10. a. He is entitled to 6% commission on sales achieved by him (during 1-May-2005 and 28-Feb-2006 turnover achieved by the employee is 2577860) .on 1/1/2004. b. 8. Mohan invests Rs 10000 in mutual fund on 1/1/2000.53lacs Solution B Mode = end. N=10.0656.31lacs. Kalpesh decides to accumulate Rs 50 lacs when he retires. 15. d.200. FV = 150000.5%. 8.83%. 20 % Basic Pay as DA (not part of salary for computing of retirement benefit).652 = 15. 12. 400000 Solution = B ½ x 26 x 41967 = 545573. 200. I = 6%. I =6. He is at present 30 yrs old & wants to retire at 55yrs .He sold the fund For Rs 15000/. c.77lacs.21% c. as DA. 750000. 741142 b. 400/.What is IRR? a. Mr.77 lakhs 56. FV = 1971288. FV = 3243372. Alpesh decides to accumulate Rs 50 lacs when he retires.a on fresh investment and also increases his investments amount to 72000/p. b) 85477 p. n = 15. You have been appointed as financial planner of Mr. 52.50 lacs.a Solution B N=10. Will he be able to save the required amount? What will be his corpus at retirement? a. no.50 lacs. PV =-683681. I = 9%. mode = end. FV = 683681. Kalpesh could save only Rs 45000/. FV = 5000000. I = 12%.000 as maturity benefit at the end of 20 yrs.39 59. Ranjit. b) 50982.e.What is accumulated value of this investments to her at age 60 yr.10.a. FV = 2490299 Mode = end. Pmt = 85477 57. If an expected return during accumulation is 7%p.611 Mode = end. I =9%.8373 N = 15. pmt = -72000. d) 51280 Solution D Mode begin.15th yr of policy and Rs 4.Rs 45000/. Mr. d. pmt = 25000. She gets survival benefit of Rs 1 lac each in 5. pmt = 51279. mode = end.611. b) 1511247. Ms Shalini purchases a money back policy at age of 30 yrs. pmt = -45000. No. b. a) 3037260.75 lacs. d) 79250 p. n= 15. Fv =2684139 i. He is at present 30 Yrs old & wants to retire at 55yrs . FV = 683681. what is saving required per year to meet his retirement needs. c) 47924. After this he realizes that he can now earn 12% P.for the first ten years .8373.a.55 58.a. n = 20 x 12. 2490299+2684139= 5174438.a.00. pmt = -45000. For the rest of the working life. I = 7%/12. n = 10.how much he need to save next 15 years to meet his retirement corpus. I = 9%. He expects to live up to 80 yrs. I =9%. If Mr. a) 47646. c) 98450p. c.Assume interest rate 9% and inflation 5% Compounding to be done on annuity certain basis. I = 7%.74 lacs Solution D Mode = end. 48. You have to plan in such a way that Ranjit starts getting 25000 pm from the very day he retires and keep receiving till his survival. n = 25. He is 35 yrs old at present and would be retiring at age 60 yrs.a. yes.a. She invests entire benefits of this policy at 8%p. . 49. mode = end. a) 147008 p.8373 PV = -683681. Yes.for the first ten years . 51.8373. pv = -3243372. 5%. FV3 = 317217 PV = -400000. 438781 d) 14773065. FV = 585307 Mode end.What will be saving required per annum? a) 86987. I =4%. pmt = 35000. I = 2. FV 4 = 863570 Total 2331730 60. I = 6. He wants to maintain present standard of leaving . n =40. mode = end. 438300 c) 13785155. I = 8%. i = 8%. I = 0. c) 82689. PV = -1000000. I = 8%. FV1 = 684848 PV = -100000. Branden presently 30 yrs old. PV = -5472593 FV =5472593. he needs to save every year in the end to meet his plan of retirement. 25100065. Inflation is 4. Sumit present age 25 yrs wants to retire at 55 yrs .5%.Life expectancy is 70 yrs. 541093 b) 12773065. pmt = 438781 62. FV2 =466096 PV = -100000.000 p. n = 10.c) 2331730.He estimates that he will require 35000 pm after retirement. b) 63358. FV = 13785155. n = 30.5% and return on investment is 6. i = 8%. I = 7%. a). Mr. pmt = 585307. His present savings are around 10 lacs. Monthly pension of an employee under EPS’95. What will be nest egg required at age 45 yrs? What amount.a.Inflation is 4% and expected return on investments are 7%. if pension able service is 30 yrs & pension able salary is Rs6000/a) Rs6000 b) Rs2571 c) 3000 d) 1500 Solution B Monthly pension = pensionable salary x pensionable service/ 70 = 6000x30/70 = 2571 . n = 15 x 12. Mr.88%. He expects to survive upto 85 yrs . n = 15. d) 85479 Solution B Mode = end.He is currently spends around Rs 3. PV = -13785155 Mode = end. n=15. n = 15. pmt = 63358 61. 740530 Solution C Mode = end.159489633%.25. n = 25. d) 1531730 Solution C Pv = -100000. n = 20.PV = -325000. wants to retire at 45 yrs. Sec A Solution A 65.p. Inflation is around 6.63. Security B 18% return & 8% SD. Mr. What is the taxable component? a) 4000 b) 12500 c) 20000 d) Nil Solution C Leave encashment during service is fully taxable. a) 3% b) 3. 66.2007 after completing service of 29 yrs 8 mths. Anup receives Rs 62. what is the amt of gratuity exempt from tax? a) 53653 b) 8346 c) 62000 d) Nil Solution B 30 x 3100 x 15/26 = 8346 67.1.29% c) 3. His salary at the time of retirement is 3100/. He receives Rs 20. Security A 12% return & 7% SD. working with a Pvt.000/.towards leave encashment in 2007 which is equal to 1 mths salary.as gratuity. since 2004. Sec B b. is covered under Gratuity Act 1972. Aman 25 yrs old. The Co.000/.5 % & interest rate is 10%. Which one would the client prefer? a. Sharma is retiring at 60. He retires on 31.m.5% Solution B Real rate = 1 + nominal rate = 3.29% 1 + inflation 64. He has got a nest egg of Rs 20 lacs. Calculate rate of growth.35% d) 2. Ltd Co. As a person approaches the retirement date almost all his contributions to the retirement plan should be kept in investments which offer him the _____ a) Highest safety of capital B) Mostly into equity related avenues c) In banks to provide liquidity d) None of the above Solution A . No b. Post office savings account. Monthly pension of an employee under EPS’95. Yes for another 5 years on year to year basis d. Can the post office recurring account be continued on maturity? a. False interest is payable Quarterly d. 5 d. a. The above statement is False c. YES c. The above statement is False c. a. Post office Time deposit account b. The above statement is True b. if pension able service is 35 yrs & pension able salary is Rs6000/Ans a) Rs6000 b) Rs2571 c) 3000 d) 1500 Solution C Monthly pension = pensionable salary x pensionable service/ 70 = 6000x35/70 = 3000 . c. A senior citizen savings scheme cannot be extended for next three years after maturity of account. a. Post office recurring deposit scheme d. 3 b. The above statement is True b. 6 c. Solution C 72. Yes for three blocks of 5 years each. The post office recurring deposit account is normally for _____ years. Neither of the above Solution C 70.State whether true or false 68. Neither of the above Solution B Senior citizen savings scheme can be extended for 3 years after maturity of account 69. 2 Solution C 71. There is no such a scheme Solution C 73. Senior Citizen Savings scheme the interest is payable monthly. Which post office savings scheme earns rebates for 6 to 12 months advance Deposits? a. 06748 X 100 = 106. the corpus is invested in a pension fund yielding annual inflation .413% c. 106.773 = 1. a. 6.5% maturing in 3 years. 106.5% & market price of Rs.773%.3208 c. 90 c.. 100 Solution A N = 3. 7.PV = 90.76 d. Post retirement your client would require 70% of his current personal annual expenses adjusted for inflation in the beginning of the first year of his retirement. He wants to know what monthly amount towards his retirement corpus and estate is required to be invested in an equity oriented Mutual fund from today onwards till his retirement. n = 3. with coupon rate of 7. Nil Solution A 7.5 / 10. 100 d. In the distribution phase.5.75 76. pmt = 10 .143% b. I = 14%.75 c. PV = 106.5 / 105 = 0. if the ytm is 9%.105 is ___ a. The current yield of a bond with coupon rate of 11. I = 9%.The current yield of a bond. 106 b. Nil Solution B 11. a. 90. 107. How much is the price of this bond.143% d. Calculate the bonds price with face value of 100 & coupon rate of 11.717 78.143 75. pmt = 11.74. 7. at then prices for both his daughters each as estate.717 b.25 lakh cash. He also wants to leave Rs. 91 d. 100 b. 105 Solution B Fv = 100.0714285 X 100 = 7.5% is 10. FV = 100. What is the price of a bond whose face value is 100 coupon is 10% maturing in 3 years if the ytm is 14% a. .3208 77. 055]-1x 100 = 1.e 780000 x 0. NAV of a fund on march31’2001 was 14. a. Rs.a. Rs. Return on Equity / Equity based Mutual fund is 12%p. To help him in his financial planning he has provided you with the following information. so PV = 1479319. Retirement @: 62years of age i. He wants 70% i.a.000.9488792935 Now find the PMT using mode = begin.07/1.65. 37075 D.e find FV of 546000 at inflation rate of 5.85 79. Rs.948879293.nil Solution A (15. 24 lakh. Now find the monthly effective rate APR using the CNVR function i. rate. This is the annuity required every year for 18 years i. 65000 so annual expenses will be 65000 x 12 = 780000.145 D .5% after 13 years this is Rs. g. his basic salary is Rs.45 *100 = 5.421800948 So corpus required at the time of retirement.a. A. find APR = 11. using the percentage change in NAV method find out the annualized return A .e 11.25 -14.145 B . 1095153.45)/14. c. n = 18.421800948.e after 13 years i. i% = 7.45. h.38655152/12 = 0.5% p.53125 Solution: D Current monthly personal expenses: Rs. n=13x12. The current inflation rate is 5. working in an Indian Multinational company and drawing an annual salary of Rs. current age 49 years. Life expectancy: 80 years of age. e. and is expected to remain same throughout.21.536% *12/3 . 3 months later the NAV had grown to 15.70 = 546000 First find the rupee value of the expenses in the first year of retirement i. i% = 1. pmt solve = 53124. FV = 5000000. 51058 C. i%=12. so PV = 17530545.000pm of which 100% is included for retirement purposes. mode begin. pmt = 1095153.e (80 – 62).adjusted annuity yielding 100 basis points above risk free rate. 80. d.a.000pm and DA is Rs.58 [B] Total corpus required at retirement = A + B = 19009858 To accumulate this corpus he wants to invest monthly in an equity MF at 12% p.25. 74121 B. f. b. n= 18. Rs. Risk free rate is 6%p. his present personal monthly expenses are Rs.22 C .22. Fv = 19009858.a Real rate = [1.38655152.5%p. The rate of annuity is 100 basis points i. 30.e n= 12.91 [A] Corpus to leave an estate of 50 lakh for daughters Mode = begin. i% = 0.e 1% above risk free rate of return = 6% + 1% = 7% Inflation is 5. now find the monthly rate i. e.328 82. total pension 36000 + 15000 + 7200 = 58200 st . NAV of a fund on Jan ’2001 was 15.225 at the end of the year the worth of his holding was 18. 6..1.20)/18. 58200 D. 6 C.9. extra unit purchased = 1.3102% th st 83.96117.25/ 23.328% C.225 =.225) + 1. reduced pension from Jan to March = 2400 x 3 = 7200.05319 x 24. Mahesh bought units of a mutual fund for 18.20.35. 75000 as exempt amount. can commute 50% as gratuity not received i.865 *100 = 3. Calculate amount of pension includable in salary income for AY 08 – 09.3102% B.5 = 0. but commutes 90000 therefore 90000 – 75000 = 15000 = taxable.75 = 9. Mohan bought units of a mutual fund for 23. total units = 1.65 = 25. Compute his return using reinvestment method A.35 -15. 9. B. 58000 E. Mukesh retired from 30 June 2007.75)/ 23. 5 Solution A (16. Nil Solution A Dividend received = Rs.865. Nil Solution B Dividend received 10 * 12% = 1. He received pension of 6000pm till 31 Dec 2007.5 at the end of the year the worth of his holding was 24.13% C. 52800 C. HPR = (25.96117 – 23. 9 D. ((18.865)/15.114 B. Nil Solution B Uncommuted pension from June to dec’07 = 6000 X 6 =36000 Total pension = 90000/60% = 150000.65. 9.25. Using the percentage change in NAV method find out the annualized return A. 6 months later the NAV had grown to 16.80. since 1 Jan 08 he gets 60% of pension commuted for 90000.238% B. value of holding at the end of the year = 1.9.75 he receives a dividend of 12.725-18. Assume no gratuity received. 5. 9.5% Which he reinvests in the fund at the then prevailing NAV of 23.05319.05319.057% *12/6 81.725 & he had received a dividend of 12 % compute his return using simple total return method A.114 D. 9% D. 65.09. Seema aged 35 years requires 20lakhs at age 55. n = 15. He wants 75000 pa post retirement.15. PV = -429096.14.8181.000 and Rs 9. gratuity as per the act = 110000 x 23 x 15/26 = 1459615. Prakash wants to know the amount of Gratuity he is likely to get from the company and what amount will be taxable out of the same. 1972 and pays higher amount. max exempt = 350000. 17900 M.09.20.000 Solution: B Basic salary: 80000. His basic salary p.m. of years of service: 23. 12. How long will his corpus suffice him? F. If she starts today using an annual stepped up method. if eligible.000 and Rs 5. Amar is 30 years old wants to retire at 45 years. rate = (8-10)/1. 9 years H.59. pmt = 17922 Alternate method use Goal seek in excel 86. 12.09 Mode = beginning. Calculate how much she needs to save in first year to ensure that her investment plan corresponds with salary growth.24. pmt = -25000. Assume interest rate 8%.4148 N=20. n = 20. pmt = 75000. Prakash is working in an MNC from 1st July 1986 and has given a notice on 31st Dec 2008 to his employer for relieving him from his job by 31st July 2009. 87. to its employees than the statutory limit as per the act. 8. earning an interest rate of 5%.84. N =8. PV = -539464. I = 5%.10 = -1. 17922 L. What is the present value of an investment that will be worth Rs 10000 in 10 years based .000 Q. no. FV = 539464. is 80000 with DA 30000 p.615 P. growth 10% and inflation 4%.m. PV = -429096. N.615 and Rs. Rs.59 years 85. 7 years Solution C Mode = end.194 O. 18900 Solution B FV = 2000000. so taxable gratuity = 1109615. Rs. Mr.4148.194 and Rs. J.70.74.9. DA: 30000. Prakash is eligible to receive Gratuity from his company. of which 100% is included for retirement purposes. His company calculates gratuity as per the Payment of Gratuity Act. 8. 11. I = 8%. 8 years G. 17596 K. He deposits 25000pa at the yearend for 15 years.59years I. Rs. If Jagan’s target replacement ratio is 70% of his last drawn salary. He will retire at the age of 55 years & his life expectancy is 76 years. I = (5%-4%) / 1.3%/26. 14933 C.2989 90. 1992183 Solution B FV of salary = 68000 x (1. 68000 pa. a 45 years old executive earns a salary of Rs.3%/26.16933 Solution C PV = -2000.9615.7402 Pmt = -80. How much will the account have on 15 April ’08? Interest rate of 8. 5584 T.2474 Total accumulation = 3026. I = 4%.9876 89. Jagan.2000. r = 8. He expects his current salary to grow by 6% pa.on an inflation rate of 4% pa? R. 6756 U. To avail the withdrawal from the PF for the purchase of a ready built house / flat or Construction of a house the member should have completed 5 years of membership of the fund and the purchase should be in favour of A.35. 15933 D. 1613980 B.06^10) = 121777. n = 5 x 26.) A.35 Capital requirement for retirement = pmt = 85244. r = 8. PV =6756 88. n =21. FV = 12906.1000/B. 13933 B.1000/C. The inflation rate is expected to be 4% pa.6434 Expected expenses = 70% x 121777.04 = 0. Member or member & spouse with minimum balance in members account should be Rs. ( Assume salary increments are given at the beginning of each year. Spouse only with minimum balance in members account should be Rs.6434 = 85244. throughout his lifetime & the expected return on investment is 5% pa. during retirement. there after he deposits Rs. PV = 1629499. n = 10.1000/th th . Ajay opens a saving account on 15 April 2003 with a deposit of Rs.2474 = 15932.3% A. n = 5 x 26.80 into the account fortnightly. Member only with minimum balance in members account should be Rs. 1629499 C.7402 + 12906. Calculate how much he needs as his retirement fund. 8203 Solution C FV = 10000. 197321 D. 3855 S. FV = 3026. Hybrid Plans D. (iv)The expression "sons" and "daughters" shall include children 2[legally adopted by the member].1000/Solution A 91. _____ is a single premium market linked deferred pension plan from ICICI Prudential Life Insurance Company. Generally not structured to provide a monthly pension benefit at retirement b. Defined Contributions Plans C. None of the above . A. Defined Benefit Plans B. Member & spouse with minimum balance in members account should be Rs. Solution B 93. Both statement are false B. None of the above. The employer & the government c. Both statements are True C. It’s aimed at offering the employees a way of participation in the company’s profit A. The Central Government only d. Definition of "Family" for the Employee’s Pension Fund means (i) wife in the case of male member of the Employees' Pension Fund. Life time Pension D. New Jeevan Dhara I Solution B 92. Profit sharing plans are a. Only A is true D. Forever life B. a. Life link Pension C. The employer only b. (ii) husband in the case of a female member of the Employees' Pension Fund . Solution C 95. Profit Sharing plans are ______ A.D. Only B is true Solution: B 94. and (iii) sons and daughters of a member of the Employees' Pension Fund . The administrative charges for the EPS are paid by a. No administrative charges are paid. Both A & B D. In current times of recession. Rajan aged 46 years wants to purchase an annuity when he retires at age 60 years. Sumitra’s life expectancy = 77 years so annuity required for 77 – 57 = 20 years 99. Only 1. Sujit’s company is going through financial crisis. a minimum of Rs 5/.450000/-. Administrative expenses for Employees Provident Fund scheme payable by the employer every month will be ______ a. All of the above c. Only B C. 20 years b. with a down payment of 20% and installments to be paid for 15 years at the rate of 12% per annum. Sumitra’s age at Rajans retirement = 57. to be paid to him or his wife Sumitra aged 43. Life expectancy of Rajan & Sumitra is 80 & 77 years. till any one of them is alive. 15 years c. 4320 c. pmt = 4320. i = 12/12 = 1%. Only A B. 18 years Solution: A Rajan current age 46. 21 years d. Calculate the estimated monthly installment. What should be the term of this annuity? a.payable by the employer every month.b.& 3 Solution B 96. Due to continuous losses the management has decided to offer Voluntary retirement to its employees on 1-4-2009. 4000 Solution = B Find PMT PV = (450000 – 90000) = 360000. age at retirement 60. Arun has taken a loan of Rs. n = 15 x12. 1.10% of total wages on which Provident fund is recovered b. None of the above Solution C 97.605 98. 3240 d. 4300 b.2. a. The company has got the VRS scheme approved through IT . A. Only 1 & 2 d. 08 ((504760+6000)+(6000*9/12)+(6000*6/12)+(6 000*4/12))*0. Rs.. He has asked for your advice on net tax proceeds out of his VRS amount of Rs.08 ((717791+6000)+(6000*9/12)+(6000*6/12)+(6 000*4/12))*0. 2000 p. Rs. she had joined this company on 01-08-2002. The same will be---a. DA Rs.8. 17.85 lakh Solution: B Outstanding Balance Contribution during the year closing balance end of year Date Interest Calculation of interest 1‐Jul‐09 1‐Apr‐10 1‐Apr‐11 1‐Apr‐12 1‐Apr‐13 1‐Apr‐14 1‐Apr‐15 450000 504760 570381 641251 717791 800455 889731 18000 24000 24000 24000 24000 24000 36760 41621 46870 52540 58663 65276 504760 570381 641251 717791 800455 889731 ((450000)+(6000*9/12)+(6000*6/12)+(6000*4/ 12))*0.08 ((570381+6000)+(6000*9/12)+(6000*6/12)+(6 000*4/12))*0. The amounts are proposed to be deposited in the first five days of July..m.90 lakh d. respectively. The company is covered under the provisions of Payment of Gratuity Act.21 lakh b. She has approached you on 31st May 2009 for advice on the same and wants to know the maturity amount on 1st April 2015 when the account matures. Rs.60 lakh c. She has not made any transactions in her PPF A/C since April this year.95 lakh b. 8.08 ((641251+6000)+(6000*9/12)+(6000*6/12)+(6 000*4/12))*0. Transport allowance Rs. October. Rs. Rs. Anuradha wants to know that in case she resigns from her job on 31st March 2009. 8. Rs. therefore the net proceeds receivable is 1500000 – 509850 + 500000 = 1490150.(Use the current rate of interest earned by the PPF a/c).89 lakh c. December & April. 20 lakh.99% = 509850.m. 13.08 101. 6. 100. 30000p. 15.76 lakh d.Authorities.50 lakh Solution: C Exempt amount 5lakh so tax on balance amount of 15 lakh @ 33.15000 p. The current balance in her PPF a/c on 31st May 09 is Rs. Anuradha aged 31 years is working with a real estate company in Lavasa. 1972 she is drawing a basic salary of Rs.m. 450000/-. what gratuity she will . Rs 14. a.000 in her PPF A/c for the rest of its tenure.08 ((800455+6000)+(6000*9/12)+(6000*6/12)+(6 000*4/12))*0.m. Your client Rani wants to invest regularly on a quarterly basis an amount of Rs. 8. HRA 15000 p. Rs. 2750 E) Rs. Rs.235 Solution: B years 0 1 2 3 4 5 6 7 8 9 son daughter amt required 12 16 0 13 17 0 14 18 5000 15 19 5000 16 20 5000 17 21 5000 18 5000 19 5000 20 5000 21 5000 NPV with RR 36. You and your spouse have found your dream home.26 Find PMT with investment rate 9% RR [1. How much should she save each month.000 per year and has been increasing at 7% per year.09/1. 750 B) Rs. Rs. 745 C) Rs. Rs. 2. 155770 c. The tuition cost is currently Rs. a. you will put Rs 50.07]‐1 x100 1. 158500 b.869 745. The selling price is Rs 220. A) Rs. 181731 Solution: D Completed years of service = 6 years 8 months.a. The divorce decree requires that she pay 1/3 of the college tuition cost for her children.02 103. 119545 d. What will each payment be? A) 1188 B) 1181 .5% APR for the balance.500 D) Rs. 15.000 down and obtain a 30-year fixed-rate mortgage at 7. Rs. 2. She has availed maternity leaves from 1st November 2003 to 28th February 2004 and from 1st December 2007 to 15th February 2008. Gratuity payable = 45000 x 7 x 15/26 = 181731 102. Vinaya was recently divorced and has two children.159. beginning today for the next five years to finance education for both the children (in nearest rupee)? Assume that her after-tax rate of return will be 9% and that general inflation has been 4% p. Assume that monthly payment begins today. last drawn salary = 30000+15000 = 45000. Her son and daughter are 12 and 16 respectively and will attend college for four years beginning at age 18.receive from her employer.000. would be needed beginning 15 years from now. A client has the need to provide for his child's college education costs. so pmt = 1181 104. He envisages that four annual payments of Rs 20. The cash purchase price of an item is Rs.5/12.75.C) 1359 D) 1529 E) 1538 Mode = begin.000 and a series of 5 half-yearly payments thereafter.58333333.58333333.065 In excel use cumipmt function to get total interest paid. pmt = 50802. calculate the present value to be placed on this liability when carrying out a needs analysis for this client.∑INT = SOLVE = 741469. The first installment is payable after one and a half year. 105. i% = 10/2. What is the total amount of interest Avinash will pay over the term of the mortgage? (Select closest answer) A) Rs 647000 B) Rs 741470 C) Rs 776300 D) Rs 730210 E) Rs 697000 Solution: B First find monthly pmt with mode = end. Avinash pays his mortgage of Rs.i% = 0. PV = 1200000.93925.000. 10. pmt = -10785. i% = 7/12=. 00. Now in AMRT. what will be the half-yearly installment? A) Rs 50802 B) Rs 45678 C) Rs 29412 D) Rs 48383 E) Rs 43885 Solution: A First find the FV of the cost price after 1.5 years i. (Round of your answer to the nearest '000') A) 23000 B) 50000 . PV = 220000-50000= 170000. If the company wants rate of interest of 10% P. PM1 = 1. PM2 = 180.e n=3 half years. i%= 7. set = end.A. The selling company however offers installment plan.93925. n= 15 x 12.000/.PV=1200000. PMT = -10785.61813 106. FV = 219948. 2. i% = 10/2. Avinash makes the payments on a monthly basis.. Assuming level of inflation rate at 5% per annum and that the fund earns 8% per annum returns throughout.75. in current money terms. which allows an immediate payment of Rs.n = 180. Now calculate the pmt with PV = -219948. 12 Lakh for 15 years at an interest rate of 7%. PV= -190000. n =5. compounded half-yearly. n=30 x12. He wants to know the actual return of his portfolio.85714 107.a. 4. after tax and inflation.50% p.60377 .60% p. c.285.70% p.a.a. in 3 years.96 [1. 3.70% p.077/1.C) 24000 D) 34000 E) 49000 Solution: B 0 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 10 0 RR 11 0 12 0 13 0 14 0 15 20000 16 20000 17 20000 18 20000 NPV 50.7%.05]‐1 x100 2.30) = 7.a. 1.and inflation is 6%p. d. a. if his income tax slab is 30%. b. 1. The debt mutual fund of your client has generated returns of 11% p.a. Solution: D Return after tax = 11 x (1. Return after inflation = [1.06]-1 x100 = 1.0.08/1.a.