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Vijay Case solution

1)

B)
Term
51 80-29
Till Khyati is 80 years
inflation
0.04
Debt
0.09
Equity
0.15
Requirement
600000
per year returns needed today
Note: For exact corpus requirement we need to follow an alternative method.
Assumptions for corpus
if Corpus needed today
1000
Debt
900
45.43 PMT(((1+0.09)/(1+0.04))-1,51,-900,0,1)
Equity
100
9.62 PMT(((1+0.15)/(1+0.04))-1,51,-100,0,1)
yearly withdrawal till khyati is 80 years
55.05 45.43+9.62
corpus needed is
10899344 600000*1000/55.05
Thus approx Sum Assured requirement is Rs. 109 lakh.

2)

B)
Yearly effective
Inflation
0.04
Debt
0.09
Equity
0.15
Children's higher education
20:80 in Debt and Equity
No of years
amount needed
FV(0.04,16,0,-300000,1)
Mayuresh
16 561,894
19 632,055
FV(0.04,19,0,-300000,1)
Manjesh
Note: For exact corpus requirement we need to follow an alternative method.
Assumptions for Mayuresh
Yearly investment
100
Debt
Equity

719.47 FV(0.09,16,-20,0,1)
5,126.01 FV(0.15,16,-80,0,1)
5,845.48 719.47+5126.01
so to get Rs. 5,61,894 investment per year needed is
Thus approx investment per year needed for Mayuresh is Rs. 10,000
Assumptions for Manjesh
Yearly investment
100
Debt
Equity

20
80

1,003.20 FV(0.09,19,-20,0,1)
8,115.49 FV(0.15,19,-80,0,1)
9,118.69 1003.2+8115.49
so to get Rs. 6,32,055 investment per year needed is
Thus approx investment per year needed for Manjesh is Rs. 7,000

9612.46 100*561894/5845.48

20
80

6931.42 100*632055/9118.69

3)

B)
HRA
Basic Sal
DA
CCA
Children Edu
Transport All
Bonus
Gross Salary
RFA

4)

30200*12
362400*0.5
300*12
(200*12*2)-2400
(1000-800)*12

91800 612000*0.15

C)
cost
Year 1
Year 2
Year 3
Taxable

5)
6)
7)

A)
B)
C)

8)

B)
present age of Vijay
present age of Khyati
retirement age of Vijay
time to retire for Vijay
Monthly savings
yearly increase in savings
Kyati's age when Vijay retires
expected total life of Khyati
Khyati alive after retirement of Vijay
present expenses per year
inflation
Rate of returns
Exp at retirement
retirement benefits
corpus needed at retirement
value of savings at retirement
surplus

9)

362400
181200
3600
2400
2400
60,000
612,000

500000
400000
320000
256000
106000

500000*0.8
400000*0.8
320000*0.8
256000-150000

30
29
55
25 years
35000
8%
54
80
26 years
252000
4%
10%
671791
2000000
9451112
9673494
222382

55-30

29+25
80-54
21000*12

FV(4%,25,0,-252000,0)
PV((1+10%)/(1+4%)-1,26,-671791,0,1)
((35000*(((1+10%)^(25)-(1+8%)^(25))/(10%-8%)))*1.1)+2000000
9673494-9451112

B)
Sum Assured
Premium per quarter
Bonus
Interim Bonus
Total amount due
Unpaid premium
Amount to be payed today

10)

D)

11)

B)

300000
2500
120000
12000
432000
7500 less
424500

300000/1000*40
12000+120000+300000
(2500*3)
432000-7500

12)

B)

13)

C)

Mutual
Fund

Average Return Portfolio Beta


in long term

A
B
C
D

18%
14%
16%
17%

14)

B)

15)

D)
Interest
NPER
Fv

16)

B)
Present Rent
Increase
Discount Rate
PV
Approximate value

Market
Returns

Jensens Alpha

Ranking

4%
4%
4%
4%

15%
15%
15%
15%

0.25%
0.65%
0.78%
-0.20%

3
2
1
4

1.25
0.85
1.02
1.2

4%
12
32500

PV
FV
20,300 PV(4%,12,0,-32500,0)

pv

2004-05
2005-06
2006-07
2007-08
2008-09
2009-10

Risk Free

Balance B/F
20300
21956
23748
25686
27782
30049

1
2
3
4
5
6

20300
32,500 FV(4%,12,0,-20300,0)

Interest Balance C/F


1656
21956
1792
23748
1938
25686
2096
27782
2267
30049
2452
32500

20300+20300*((1.04)^2-1)
21956+21956*((1.04)^2-1)
23748+23748*((1.04)^2-1)
25686+25686*((1.04)^2-1)
27782+27782*((1.04)^2-1)
30049+30049*((1.04)^2-1)

36000 3000*12
6.5%
10%
1028571 36000/(10%-6.5%)
Rs. 10 lakh

Apra Case solution


B)
17)

18)

C)

19)

C)
Compounding rate of interest=
Compounding frequency=
Time=
FV of 100 rupees deposited=
Absolute return in% over 3 years=
Annual Yield=

12%
Quarterly
3 years
142.58 100*1.03^12
42.58% (142.58-100)/100
12.55% 1.03^4

18%-(4%+(1.25*(15%-4%)))
14%-(4%+(0.85*(15%-4%)))
16%-(4%+(1.02*(15%-4%)))
17%-(4%+(1.2*(15%-4%)))

20)

A)
Sameer's capital account balance as of 31/03/2008=
Add: Accured interest on NSC for last 5 years (253064-200000)=
31/3/2006
200000
16320
216320
31/03/2007
216320
17652
233972
31/3/2008
233972
19092
253064

2849705
53064

Accured interest on bank FDR for last 6 months=(500000*1+(.0875/2))=

21875

Total Net Worth=


21)

2924644

C)
Sameer's insurance calculations

Year

Premium

1
2
3
4
5
6
7
8
9
10

Premium Alloc
charge

35000
35000
35000
35000
35000
35000
35000
35000
35000
35000

12%
5%
5%
3%
3%
1%
1%
1%
1%
1%

Premium
available for
allocation after
PAC

Mortality
Charge

30800
33250
33250
33950
33950
34650
34650
34650
34650
34650

755
793
832
874
918
964
1012
1062
1115
1171

Premium after
Growth of funds
PAC & Mortality
at 10%
charges
30045
32457
32418
33076
33032
33686
33638
33588
33535
33479

33049.50
70629.22
111199.91
155770.89
203892.91
256620.31
313552.45
375026.22
441405.56
513083.68

After FMC

Amount in
the kitty after
Policy Admin
FMC & Policy
Charges
Admin
Charges

32471.13
69393.21
109253.91
153044.90
200324.79
252129.46
308065.29
368463.26
433680.96
504104.71

Claim Proceeds at the end of 5th year


Say

22)
23)

24)

A)
B)
Sum Assured
Rev Bonus for first 5 years
Rev Bonus for last 15 years
Additional Bonus
Maturity Amount
B)
Date of joining=
Date of probable resigning=
Total Period=
Gratuity payable for=
Last drawn basic+da (pm)
eligible annual salary=45000/26*15

Gratuity Payable=
25)

D)

1150000
287500 50/1000*1150000*5
1035000 60/1000*1150000*15
184000 160/1000*1150000
2656500

1/8/2002
31/03/2009
6 years & 8 Months
7 years
45000 30000+15000
25961.54 45000/26*15
181731 25961.54*7

720
720
720
720
720
720
720
720
720
720

31751.13
68673.21
108533.91
152324.90
199604.79
251409.46
307345.29
367743.26
432960.96
503384.71
199605+500
699605 000
Rs. 7,00,000

26)

A)
Today Apra's Age=
Monthly addition in loan account=
Desired upto=
Interest=
Total Months Balance=

31
30000
55
1.50%

288
-965644
500000
1,051,646 FV(1.5%,12,-30000,-965644,1)-500000
215,776,526 FV(1.5%,286,-30000,-1051646,1)
21.58 Crore
215776526/10000000

Apra's loan account balance as of 31-3-2008=


Scheduled withdrawl as of 31-03-2009=
Balance as on 31-03-2009=

Balance as of 17-01-2033=
27)

or
A)
Current age
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

375000
375000
375000
375000
375000
375000
375000
375000

1019858.897
1101447.609
1189563.418
1284728.491
1387506.771
1498507.312
1618387.897
1747858.929

Total PV after 1 year=


Ist payment due from 1 year from now=after
Rate of interest=
PMT=

28)

C)

years
rupees
years
pm

362595
359269
355973
352707
349471
346265
343088
339941
2809308

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

375000
1387506.771
349471
375000
1498507.312
346265
375000
1618387.897
343088
375000
1747858.929
339941
375000
1887687.643
336822
375000
2038702.655
333732
375000
2201798.867
330670
375000
2377942.776
327636
5516932 2809308+2707624
2707624
13 years
9%
pa
-676,035
PMT(9%,13,5516932,0,1)

29)

B)
1
2
3
4
5
6
7
8
9
10
11
12
Total

30)

17,000
16,983
16,965
16,948
16,930
16,912
16,894
16,876
16,858
16,839
16,820
16,801
202,827

IPMT(12%/12,1,20*12,-1700000,0)
IPMT(12%/12,2,20*12,-1700000,0)
IPMT(12%/12,3,20*12,-1700000,0)
IPMT(12%/12,4,20*12,-1700000,0)
IPMT(12%/12,5,20*12,-1700000,0)
IPMT(12%/12,6,20*12,-1700000,0)
IPMT(12%/12,7,20*12,-1700000,0)
IPMT(12%/12,8,20*12,-1700000,0)
IPMT(12%/12,9,20*12,-1700000,0)
IPMT(12%/12,10,20*12,-1700000,0)
IPMT(12%/12,11,20*12,-1700000,0)
IPMT(12%/12,12,20*12,-1700000,0)

A)

Computation of Income tax liability for Ay 2008-09 for Sameer


Income from Business
Income from other sources
Accrued Interest on NSC
Accrued Interest on FDR
Gross total Income
Less deduction u/s 80 C
Endowment Policy Sameer
Endowment Policy Swati
Interest accured on NSC
PPF

Net Taxable income


Tax Rates

0-110000
110001-150000
150001-219379
E.Cess
Total Tax
Tax payable

278412
19092
21875

38002
9254
19092
50000
116348

40967
319379

100000
219379
Nil
4000
13876
17876
536
18412
18410

31)

A)
Basic Salary
D.A.
HRA
Transport Allowance
Child Education Allowance
Telephone Allowance
Entertainment Allowance
Driver Allowance
Travelling Allowance
Medical Allowance

Current
30000
15000
15000
2000
2000
2000
2000
2000
2000
1500

Last Year
24000
12000
12000
1600
1600
1600
1600
1600
1600
1200

73500
58800
882000
705600
Interest from Saving A/c
Interest from Sameer's firm

Taxable
288000
144000
144000
9600

16800
0
0
19200
19200
14400
Total Salary
Bonus

Less 80C/D

655200
200000
1123

141550
997873
110000

887873

32)

B)

33)

B)

or
0-145000
145001-150000
150001-250000
250001-887870
Tax
Surcharge
E.Cess
Total Tax

887870
Nil
500
20000
191361
211861
0
6356
218217

or

218220

Heads considered Club facilities


Gifts
Repair & Maintenance of car

% of expenditure deemed to be
fringe benefit
50%
50%
20%

FBT to be paid
8497.5 (50000*33.99%)*50%
8497.5 (50000*33.99%)*50%
3399 (50000*33.99%)*20%
20394

Tax she would have paid on Rs.1.5 Lakhs, if she does not opt for FBT treatment -

46350 150000*30.9%

Tax savings on opting for FBT on the three items =

25956 46350-20394

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