Level 4 - (Workbook)

Solutions 1) A) 80000 80000+30000 Basic Salary p.m. 30000 Dearness Allowance p.m. 110000 Total Salary for Gratuity purpose No. of years of service 23 (110000*23)*15/26 1459615 Eligible Gratuity as per Act 1459615 Tax Free Gratuity (Limits are 0 increased to 20,00,000) Taxable 2) C) Expenses per month = Rs65000 Yearly expenses = (65000*12) 780000 65000*12 Present age 49 Age at retirement 62 Life expectancy 80 62-49 Investment year sun to retirement 13 80-62 Annuity required for number of years 18 Annuity required in the first year of 780000*(1.055)^13*0.7 retirement 1,095,153 (Inflation adjusted curtailed to 70% of present expenses) Yield of annuity (1% above risk-free rate 7.00%p.a. of return) 5.50%p.a. Rate of inflation Corpus required at the time of retirement 17,530,539 PV((1+7%)/(1+5.5%)-1,18,- for expenses 1095153,0,1) Corpus required at the time of retirement 1,479,320 17530539+1479320 for providing for 50 lakh as residue 19,009,858 Total Corpus required To accumulate this Corpus, a certain sum has to believe stedin an Equity oriented MF scheme per month CFP Final Level: Workbook Page 243

Rate of Return of Equity MF scheme 12%p.a. Amount to be invested per month 53125 PMT((1+12%)^(1/12)- 1,12*13,0,-19009858,1) 3) D) (FV after three 2000000 This is the value on Amount required by years) 26th year Priyanka after 3 years = Rs 20 lakhs Amount ear marked for the FV(6%,3,0,- 595508 value after 3 years same = Rs 5 lakhs 500000,1) 2000000-595508 Future value of the remaining amount = Rs 1404492 14,04,492 Rate of return of Money 6.00%p.a. (1+6%)^(1/4)-1 Market MF 1.47% Quarterly effective rate of return Quarterly amount required -106333 PMT(1.4674%,12,0,1404492,1) to be invested to attain the 5 goal for the next three years PV Alternative method 00000 2 FV - PMT(1.4674%,12,- 000000 500000,2000000,1) pmt 106333 4) B) 150000 150000+100000 Interest 61857 - Present Personal loan 100000 saved 47943 Tax outstanding 250000 PMT(24%/12,3*12,- Total Amount outstanding 150000,0) Page 244 EMI for Rs150,000 for 3 5885 years @24% 5885*(3*12) Total Amount payable 211857 211857-150000 Interest payable 61857 PMT(19%/12,3*12,- EMI for Rs 1,50,000 for 3 5498 years @19% 150000,0) Total amount payable 197943 5498*(3*12) Interest payable 47943 197943-150000 CFP Final Level: Workbook

EMI for Rs2,50,000 for 3 9164 PMT(19%/12,3*12,- 74626 1071364 - years 250000,0) interest 996738 Total amount payable 329904 saved Interest payable 179904 9164*(3*12) Renewed(10Yrs) 329904-150000 EMI on 30 lacs 6.00% Existing(8Yrs) Total amount payable 33306 8.00%InterestPayable Interest payable 3996738 996738 42410 4071364 1071364 Gross EMI payable after 42470 33306+9164 rescheduling 88540 13915+74626 Interest saved after rescheduling 5) C) 6) C) 7) A) 8) C) 9) D) Annual rate MMMF 6.00% Half-yearly rate 2.96% (1+6%)^(1/2)-1 MMMF Annual rate Equity MF 12.00% Half-yearly rate Equity 5.83% (1+12%)^(1/2)-1 MF Dates Portfolio Withdrawn 0 Amount Amount 2000000 1-Jan-21 5800000 1 year 31-Dec-21 6148000 0 1-Jan-22 4148000 -413477 1.5 year 30-Jun-22 4270627 Deficit (2586523- CFP Final Level: Workbook Page 245

3000000) 10) D) Date Withdrawal Outstanding Quaterly Balance Contribution 1-Apr-20 182614 14000 1-Jul-20 14000 1-Oct-20 14000 1-Jan-21 14000 1-Apr-21 256023 14630 17409 (182614+14000)*0.08+14000 *0.08*3/4+14000*0.08/2+140 00*0.08/4 1-Jul-21 14630 0 1-Oct-21 14630 0 1-Jan-22 14630 0 1-Apr-22 337951 15288 23408 (256023+14630)*0.08+14630 *0.08*3/4+14630*0.08/2+146 30*0.08/4 1-Jul-22 15288 0 1-Oct-22 15288 0 1-Jan-23 15288 0 1-Apr-23 429198 15976 30094 (337951+15288)*0.08+15288 *0.08*3/4+15288*0.08/2+152 88*0.08/4 1-Jul-23 15976 0 1-Oct-23 15976 0 1-Jan-24 15976 0 1-Apr-24 530635 16695 37531 (429198+15976)*0.08+15976 *0.08*3/4+15976*0.08/2+159 76*0.08/4 1-Jul-24 16695 0 1-Oct-24 16695 0 1-Jan-25 16695 0 1-Apr-25 643205 45790 (530635+16695)*0.08+16695 *0.08*3/4+16695*0.08/2+166 95*0.08/4 Equity MF Scheme Year Accumulated Amount CFP Final Level: Workbook Page 246

1-Apr-20 520000 520000*(1.12) 1-Apr-25 916418 ^5 11) B) Mutual Funds Market Value 600000 60000 Units 750000 60000*12.5 Car Market Value 500000 Car Loan O/S 250000 Net Value of Car Available 250000 500000-250000 Total Amount 1000000 750000+250000 Available New Car Value 1200000 Loan Taken 200000 1200000- 1000000 EMI for Loan 8.75%compoundedquarterly p.a. effective (1+0.0875/4)^4- 1 0.7239% (1+9.0413%)^(1/12)-1 A monthly compounded rate PMT(0.7239%,12,- equivalent to 9.0413% p.a. 200000,0,0) effective EMI 17461 12) A) 13) A) 3000000 Sum Assured 55000halfyearly Premium No. of prem. paid 26 Total No. of prem. payable Paid Up Sum 40 Assured (No. of premium paid/ Total No. of premium payable)*Sum Assured 195000 26/40*3000000 CFP Final Level: Workbook Page 247

Vested bonus 850000 1950000+850000 Paid up Value 2800000 B) 60000 400000/60000 66.67% 400000/600000 0 0 33.33% 200000/600000 Portfolio Amount 15.00% 40000 200000/60000 The portfolio 0 0 18.00% weight for 20000 17.00% 0.67*(18)+0.33*(15) XYZ 0 0.18 0.22 ABC 0.70 Excepted Return of ABC Excepted Return of XYZ Expected Return of the Mr. Om Prakash’s Portfolio is Expected Return of the Mr. Om Prakash’s Portfolio is: Standard Deviation of ABC Standard Deviation of XYZ The Co efficient of correlation The variance of 374.31 (0.67)^2*(22)^2+(0.33)^2*(18)^2+ the portfolio 19.35 2(0.67)*(0.33)*0.7*22*18 is: Standard (374.31)^(1/2) Deviation of the portfolio CFP Final Level: Workbook Page 248