Question no.

1
Mr Nitin who is 32 years of age want a retirement corpus at the age of 60 to meet his future expenses with
His current household expenses Rs.10 lakh p.a. is expected to increase at the rate of 4 percent per year. Aft
to have vacation every year. The future cost of vacation would amount to Rs. 10 lakh per year. He has a pen
generate income of Rs. 35,000 per month. He plans to invest the retirement corpus in an annuity plan expe
per year.

Device a retirement plan for Nitin who has moderate risk appetite. Large cap and small cap equity fund are
average 12 percent and 16 percent respectively annual return.

Answer - 1
No. of Years 28
Current Household Expenses 1000000
Rate 4%
FV of Current Household Expenses 2998703.31918227
Future Cost of Vacation 1000000
Total Expenses at the time of Retirement 3998703.31918227
Net Income Required Post Retirement
Total Expenses at the time of Retirement 3998703.31918227
Pension 420000
Net Expenses at the time of Retirement 3578703.31918227
Expexted Return at Annuity 7.60%
Retirement Corpus 47088201.5681878
Annuity to achive the Retirement Corpus
Large Cap 12%
Small Cap 16%
FVAF of Large Cap 190.70
FVAF of Small Cap 392.50
Annuity of Large Cap 246924.36
Annuity of Small Cap 119969.09
his future expenses without any financial trouble.
of 4 percent per year. After retirement, he plans
kh per year. He has a pension plan, which will
s in an annuity plan expected to give 7.60 percent

mall cap equity fund are expected to deliver on

Question no. 2 -Mr Gupta, 30 years, wants to retire at the age of 62 years. His current annual expenses Rs
loan installment of Rs 60,000, insurance premium Rs 20,000 and school fees Rs 48,000. On retirement, he
indulge in pursuing his hobbies like travelling, doing social work, etc. and to meet his medical bills. The cur
travelling and social work is Rs 5 lakh p.a. and is estimated to increase at an average annual rate of 6%. Th
monthly medical bills for a retired person amounts to Rs 10,000 and will increase at an average annual rat
property, which is expected to fetch a rental income of Rs.40,000 per month in future. The rate of return e
of retirement is 7% p.a..
Advice how much he should invest on annual basis in a large cap equity fund to build his retirement corpu
fund is expected to give a return of 12% p.a.

Answer-2
No. of Years 32.00
Current Annual Expenses 360000.00
Loan -60000.00
Insurance Premium -20000.00
School Fees -48000.00
Total Current Annual Expenses 232000.00
Future Cost of Travelling and Social Work 500000.00
Rate 6%
FV of Travelling and Social Work 3226693.34
Present Cost of Monthly Medical Bill 120000.00
Rate 4%
FV of Medical Bill 420967.05
Total Expenses at the time of Retirement 3879660.39
Net Income Required Post Retirement
Total Expenses at the time of Retirement 3879660.39
Pension 480000.00
Net Expenses at the time of Retirement 3399660.39
Expexted Return at Annuity 7%
Retirement Corpus 48566577.01
Annuity to achive the Retirement Corpus
Equity Mututal Fund Rate 12%
FVAF 304.85
Annuity 159314.22
 s current annual expenses Rs 3.6 lakh includes
Rs 48,000. On retirement, he would like to
meet his medical bills. The current cost of
average annual rate of 6%. The present cost on
ease at an average annual rate of 4%. He has a
in future. The rate of return expected at the time
to build his retirement corpus. The equity mutual