Mr. Pankaj Sen is a Sr. Engineer with Public Works Department and posted in Kolkata, staying with his family in his own house. He had a stable tenure with the same organization for the last 35 years. He will be completing 60 years on January 2007, when he will retire from his service. During his employment, he had concentrated more on his work and less on his personal finances and as he is now on the verge of his retirement, he does not have any idea about how to manage his post retirement finances.
Pension: Rs 1,25,000/- p.a. (expected to increase @ 6% p.a.)
Pension from Life Insurance Company: Rs. 10200/- p.a. (fixed) for entire life.
An existing P.O. MIS: Rs. 4,800/- p.a. (maturing in June 2011).
Rental incomes, if any, from his houses in Kolkata & Siliguri.
Premium for Health Insurance: Rs. 3,000/- p.a. (Cover for family)
Life Insurance on daughter\u2019s life: Rs. 6,900/- p.a.
EMI for Housing loan and other loans, if any.
Municipal Value Rs. 25,200/- p.a., Actual Rent Rs. 22,000/- p.a., Standard Rent Rs. 24,000/-).
Bonds\u2013 Rs. 60,000/- (Redemption value - Maturity in Apr 2007)
PO MIS: Rs. 60,000/- (maturing in June 2011).
Other Investments including Life Insurance\u2013 Rs. 78,000/- (maturing in Feb 2007).
PPF- Rs. 81,000/- (maturing in 2010)
Retirement Proceeds: Rs. 9,50,000/- to be received in Feb 2007.
Housing loan taken by Pankaj on 1st Jul 2003 for renovation of his house in Kolkata Rs. 1,50,000/-, EMI Rs. 2630 being paid from 1st Aug 2003. Present interest being charged is 11% p.a.
Daughter\u2019s Marriage Provision: Rs. 3,00,000/- (Year 2010).
Pankaj wants to maintain Rs. 1,00,000/- in Cash for contingencies.
1. Housing loan interest rate at the inception was 8%, was 9% with effect from April 2004, 10% with effect from June 2005 and 11% with effect from April 2006 on the outstanding balance amount. The EMI is the same since inception.
process which of the following tasks have you completed in this stage?
1. Identifying alternative investment vehicles.
2. Identifying financial strengths and weaknesses.
3. Recommending specific tax strategies.
4. Preparing preliminary financial statements.
Which of the following would affect Net Worth of Pankaj?
1. Repayment of a loan using funds from a savings account.
2. Purchase of an automobile that is 75% financed with a 25% down payment.
By your recommendation Pankaj has invested a sum of Rs. 25,000/- in an equity Mutual Fund which is closed end for five years. The Mutual Fund Asset Management Company has collected Rs. 100 crore in NFO of this closed end fund. The initial issue expenditure is Rs. 8 crore. Pankaj wants to know what would be the NAV of his investment in this closed end fund upon allotment.
Pankaj wants to know the exact amount eligible for deduction u/s 24 and u/s 80C applicable to him for the home loan repayment in the AY 2007-08. As per your calculations the same should be______________________.
1. Copy of the letter of engagement;
2. Assessments of his financial situation and risk profile;
3. Summary of his objectives;
4. Recommendations, including alternative strategies;
5. Risks associated with each recommendation, including alternative strategies;
6. Transaction costs and penalties applicable to implement each recommendation;
7. Conflicts of interest;
8. Implementation and follow-up plan;
Pankaj wants to invest in shares of XYZ ltd the details of which are as follows:
- Required rate of return is 16%.
- Face Value Rs. 50/-
- Expected Dividend payout ratio is 30%.
- Expected return on Equity is 20%
Pankaj, born in 1947, has a life expectancy at birth of 65 years. He would retire in
2007. His wife, born in 1951, has a life expectancy at birth of 70 years. Pankaj is
planning to buy an annuity at the time of retirement to be paid to him or his wife till
any one of them is alive. What should be the period of this annuity? Assume that their
life expectancies have not changed.
This action might not be possible to undo. Are you sure you want to continue?