A client named Ramesh wants advice in his investment related matters. He is 45 years old and has bank balance Rs. Lacs and will retire at the age of 60 yrs. He believes that bonds and stocks will provide returns of 7 and 13% respectively.
A client named Ramesh wants advice in his investment related matters. He is 45 years old and has bank balance Rs. Lacs and will retire at the age of 60 yrs. He believes that bonds and stocks will provide returns of 7 and 13% respectively.
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A client named Ramesh wants advice in his investment related matters. He is 45 years old and has bank balance Rs. Lacs and will retire at the age of 60 yrs. He believes that bonds and stocks will provide returns of 7 and 13% respectively.
Copyright:
Attribution Non-Commercial (BY-NC)
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Download as PPTX, PDF, TXT or read online from Scribd
his investment related matters. m Ramesh is 45 years old & has bank balance Rs.6 lacs & will retire at the age of 60 yrs. m Present salary: Rs.4 lacs per year. m Wanted to invest in stocks & Bonds equally m He believes that bonds & stocks will provide returns of 7 & 13% respectively. -
m GIVEN:- m Present salary: Rs.4 lacs per year. m He is expecting the salary to be increased @ 12% every year till retirement m He plans to work for 15 more years i.e. till retirement m Future value?
· aince it is the case of compounding so: · FVn = PV*(FVIF)12,15 · Where, PV= 400,000 · Rate= 12% · Time= 15 yrs · = 400000*5.474 · = 2189600
] · Bank balance= Rs.600000
· Nothing is specifically mentioned so
an equal amount of Rs.3 lacs is allocated to both stock and bonds for a time period of 15 years.
· PV = Rs 300000 · N = 15 years · FVn = PV*(FVIF)r,n = 300000*(FVIF)13,15 = 300000*6.254 = Rs. 1876200 · Total of investment =stock + bond returns = Rs 827700 + Rs 1876200 = Rs 2703900 -
· Withdrawal of Rs 500000 for 15 years from 60 years to 75 years · Withdrawal =Rs 500000*15 · = Rs 7500000 And actual returns of Rs (2703900+2189600) = Rs 4893500 Thus, a withdrawal of Rs 500000 per year is not possible. -
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]
· Future Value = 1000000 · n = 15 years · Rate of interest = Assume 10% · Here it is the case of Discounting so:- PVn = FV*(PVIFA)r,n = 1000000*(PVIFA)10,15 = 1000000*7.606 = Rs 7606000 -
DONATION · Donation amount = 200000 for 3 years · FV = Rs 600000 · N = 3 years · Rate = assume10% · PVn = FV*(PVIFA)10,3 · = 600000*1.331 · = Rs 789600 -
· Present value of his lifetime salary:- Present salary = 400000 Discounted rate = 8%
· Time period for bonds and stock is taken as 15 years in absence of any information.
· In Bequeath of Rs 1000000 to his
children and in donation the rate of interest is assume to be 10%.