Dear Abhinay,

You can send here.It will be helpful for other students also,

]]>Thanks a ton, Manish! This is very helpful. I have a couple of new questions that I have solved in excel. I was hoping if you can verify and cross-check my answers once. I can send you those questions on your email id. It will be a great help for me. I have already funked the 3 attempts and don’t want to repeat that again.

]]>Dear Abinay,

A)First we have to calculate the corpus required at retirement age by considering the annuity of Rs 10 lakh which will grow at 2% real rate every year for 35 yrs.

pmt= 1000000

Rate=2%

Nper=35 yrs

compute pv=? 25498591

B)Second calculate the monthly investments required to achieve this corpus by considering the already accumulated amt of Rs 1 crore 50 lakhs.

PV= -15000000

NOMINAL RATE=8.65%

NPER=5*12

FV=25498591

COMPUTE PMT=? 32140

Dear Abhinay,

Their monthly expenses are not mentioned in question.Hence it is tough to calculate the surplus income.

]]>A childless couple, retired for 10 years, is surviving on a fixed monthly annuity of Rs 30,000 for life from the employer. The purchasing power of annuity has eroded in these ten years due to a constant 5% annual inflation. Their self-occupied house can be utilized for a reverse mortgage annuity, the assessed value of a house is Rs 80 lakh for a 15-year monthly annuity at 8.5% p.a. If they go for this reverse mortgage, what do you assess as the surplus income after meeting their present monthly expenses?

13575

22112

3250

15468

Mr A has 10 more years of service left He had taken a Rs 30 lakh, 20-year 95% pa housing loan 5 years ago His investment account, which has an annual yield of 8.5%, has Rs 82 lakh. He contributes Rs 10,000 per month towards this investment. You advise him to fully repay the loan by his retirement by suitably directly part of his incremental investments to an increased EMI. What will be the value of his investment account on retirement?

190.07 lakh

208.13 lakh

191.56 lakh

209.71 lakh

A childless couple, retired for 10 years, is surviving on a fixed monthly annuity of Rs 30.000 for life from the employer. The purchasing power of annuity has eroded in these ten years due to a constant 5% annual inflation. Their self-occupied house can be utilized for a reverse mortgage annuity, the assessed value of the house is Rs 80 lakh for a 15-year monthly annuity at 8.5% pa If they go for this reverse mortgage, what do you assess as the surplus income after meeting their present monthly expenses?

13575

22112

3250

15468

Dear Abhinay,

1)

a)Find retirement corpus of couple by considering the life expectancy of 85.

Return:-7.50%

Inflation:-6%

Real Rate:-1.42%

nper:-28 yrs

pmt:- -450000

compute pv(begin mode)=10490097

b)Find retirement courpus of couple in case if there life expectancy increased by another 5 yrs to 90 yrs of age.

Nper:-33 yrs

pmt:- -450000

comput pv(begin mode)=11966450

Additional funds required right now to contain the risk of longevity:-11966450-10490097=1476353 rs

]]>A retired couple, of age 60 and 57, has a fair chance of either of them surviving until age 85. They shall invest retirement funds at 7.5% p.a. to sustain an inflation-adjusted annuity of Rs 4.5 lakh pa., average inflation estimated at 6%. To contain the risk of the longevity of each of them by 5 years, what additional funds would they require today to liquidate from their land investment, to be invested along with retirement fund?

a)19.43 lacs

b)16.31 lacs

c)12.40 lacs

d)14.76 lacs

You advise Xavier, of age 35 years, to start investing immediately for his retirement at age 60 years, with monthly contributions of Rs 10,000 The investment yield is 8.5% p.a. Your other client Maria, of age 25 years, can spare only Rs 5,000 per month towards retirement savings, If Maria wants to have the same retirement fund as Xavier’s when she completes 60 years of age, what differential refurn do you estimate for her investment than Xavier’s investment?

2.95% More

0.90% Less

4.05% less

4.40% more

Don;t know the answers though.

]]>Hi Manish, thank you for your answer! Could you please also help me with the following questions:

A retired couple, of age 60 and 57, has a fair chance of either of them surviving until age 85. They shall invest retirement funds at 7.5% p.a. to sustain an inflation-adjusted annuity of Rs 4.5 lakh pa., average inflation estimated at 6%. To contain the risk of the longevity of each of them by 5 years, what additional funds would they require today to liquidate from their land investment, to be invested along with retirement fund?

a)19.43 lacs

b)16.31 lacs

c)12.40 lacs

d)14.76 lacs

You advise Xavier, of age 35 years, to start investing immediately for his retirement at age 60 years, with monthly contributions of Rs 10,000 The investment yield is 8.5% p.a. Your other client Maria, of age 25 years, can spare only Rs 5,000 per month towards retirement savings, If Maria wants to have the same retirement fund as Xavier’s when she completes 60 years of age, what differential refurn do you estimate for her investment than Xavier’s investment?

2.95% More

0.90% Less

4.05% less

4.40% more