File 29: Solution

Sum:10
Find NPV @ ROR(1.07/1.055)-1*100 of cash flow=2100236
Find FV of PV(2100236) @5.5 =4444292
Asset allocation & Rebalance
Block-1
Equity set B n=5*12 I=11 PV=0 pmt=-90 FV? p/y=12 c/y=1 FV=7120
Debt set B n=5*12 I=7 PV=0 pmt=-10 FV? p/y=12 c/y=1 FV=716
Rebalance=7120+716=7836
70%=5485 30%=2351
Block-2
Equity=14781
Debt=5445
Block-3
Equity=11006
Debt=22428
Total=33434
Find I of strategy
Set B n=14*12 I=? Pmt=-100 Fv=33434 p/y=12 I=9.28%
Find PV of FV @ 14yr I=9.28% =1283019
Block-4
Set b n=7*12 i=7 pv=33434 pmt=-100 FV? p/y=12 FV=64462
Find I of 21yr strategy
Set b n=21*12 i=? Pv=0 pmt=-100 fv=64462 p/y=12 I=8.17%
Corpus req at 21yr of pv(1283019) @ 8.17% fv= 6675386
Increase SIP by 7% expected growth

In growth formula AI=73521

Monthly SIP
N=12 i=8.17 fv=73521 p/y=12 pmt= 5870
ANSWER: Monthly SIP=5870
Sum:11
Imp.info
1.Invest till marriage immediately
2.Ratio GoldETF=30% Equity=50% Debt=20%
Corpus req at 25 of PV=1500000 @7% = 3614768
R=(.30*7.50)+(.50*11)+(.20*7)=9.15
Monthly SIP
Set b n=13*12 i=9.15 fv=3614768 p/y=12 c/y=1 pmt=? 12389
Quaterly SIP
Set b n=13*4 i=9.15 fv=3614768 p/y=4 c/y=1 pmt=? 36896
Biomonthly
Set b n=13*6 i=9.15 fv=3614768 p/y=6 c/y=1 pmt=? 24687
Daily
Set b n=13*365 i=9.15 fv=3614768 p/y=365 c/y=1 pmt=? 409
Weekly
Set b n=13*52 i=9.15 fv=3614768 p/y=52 c/y=1 pmt=? 2867
Fortnightly
Set b n=13*26 i=9.15 fv=3614768 p/y=26 c/y=1 pmt=? 5729

Sum-12
Imp.info
1. Invest in asset allocation till her marriage
2. Increase her bio monthly investment by 30% every 2yr
FOR=13yr
2yr=1000 next 2yr=1300 2yr=1690 2yr=2197 2yr=2856 2yr=3713 1yr=4827
Asset allocation
Equity set b n=13*6 i=11 pmt=-500 fv? p/y=6 c/y=1 FV=83608
Balance MF pmt=-300 FV=43459
Debt pmt=-200 FV=25146
Total=152213
Find I of strategy
Set b n=13*6 i=? Pmt=-100 fv=152213 p/y=6 c/y=1 I=9.69%
Block1
Set b n=2*6 i=9.69 pv=0 pmt=-1000 fv? p/y=6 c/y=1 FV=13284
Block-2
Set b n=2*6 i=9.69 pv=-13284 pmt=-1300 fv? p/y=6 c/y=1 FV=33253
Set b n=2*6 i=9.69 pv=-33253 pmt=-1690 fv? p/y=6 c/y=1 FV=62461
Set b n=2*6 i=9.69 pv=-62461 pmt=-2197 fv? p/y=6 c/y=1 FV=104340
Set b n=2*6 i=9.69 pv=-104340 pmt=-2856 fv? p/y=6 c/y=1 FV=163485
Set b n=2*6 i=9.69 pv=-163485 pmt=-3713 fv? p/y=6 c/y=1 FV=246035
Set b n=1*6 i=9.69 pv=-246035 pmt=-4827 fv? p/y=6 c/y=1 FV=300460
Marriage cost after 15yr=3614768
Bio-monthly SIP
Set b n=13*6 i=9.69 pv=0 pmt=? Fv=3314308 p/y=6 pmt=21778
ANSWER: 21778

Sum:13
Imp.info
1.Sanjay req 100000 cc begin of every year till retirement for annual vacation expense
2.post retirement wants 2lac every year till his lifetime
Find PV of Pmt(100000) @ ROR 1.09/1.055 for 31yr = 1981981
Find FV of PV(200000) @ 5.5 for 31yr=1051614
Find PV of pmt(1051614) @ ROR 1.09/1.055 of 18yr=14549815
Disc@9% for 31yr fv=14549815 pv=? 1006088
Total vacation corpus=2988069
Existing balanced mf=180379.12
Add req=180379-2988069=2807690
Monthly SIP req
Setb n=31*12 i=9 pv=2807690 p/y=12 c/y=1 pmt=? 21584
ANSWER: Monthly SIP 21584

Sum:14
Imp.info
1.Starting from age 40 req 1lac (cc) begin of every year till retirement
2.post retirement he wants 2 lac p.a till his lifetime
3.Vacation cost 2% excess of inflation
Find FV of PV(100000) @ 7.5 for 9yr= 191724
Find PV of pmt(191724) of ROR 1.11/1.075 for 22yr= 3075614
Disc for 9yr @ 11% of FV(3075614) pv=1202334

Find FV of PV(200000) @ 7.5% for 31yr=1882315

Find PV of pmt(1882315) for 18yr ROR 1.11/1.075 = 26162228
Find PV of FV(26162228) @ 11% for 31yr = 1029585
Total vacation corpus=2231919
Monthly SIP req
Setb n=31*12 i=11 pv=2231919 p/y=12 c/y=1 pmt=? 20118
ANSWER: Monthly SIP 20118

Sum:15
1.Sanjay req 1 lac cc begin of every year till retirement from age 45
2.post retirement 2lac p.a till their lifetime
3.Vacation cost 2% excess of inflation
Find FV of PV(100000) @ 7.5 for 14yr= 275244
Find PV of pmt(275244) of ROR 1.11/1.075 for 17yr=3665956
Disc for 14yr @ 11% of FV(3665956) pv=850483
Find FV of PV(200000) @ 7.5% for 31yr=1882315
Find PV of pmt(1882315) for 21yr ROR 1.11/1.075 = 29235397
Find PV of FV(29235397) @ 11% for 31yr = 1150527
Total vacation corpus=2001010
Monthly SIP req
Setb n=31*12 i=11 pv=2001010 p/y=12 c/y=1 pmt=? 18036
ANSWER: Monthly SIP 18036

Sum:17
1.Sahanubhuti continue her sip in eq.mf for 10yr & bal.mf for 20yr & transfer to debt from 21st yr till
retirement.
Wants to know surplus/shortfall in retirement corpus
Find FV of PV(60000) @5.5 for 26yr =241388
Find PV pf pmt(241388) ROR 1.07/1.055 For 25yr =61052403
SIP in Eq.mf
Setb n=10*12 i=11 pmt=-15000 p/y=12 c/y=1 FV=? 3186446
Seb b n=10 i=11 pv=-3186446 fv=? 9047662
SIP in Bal.mf
Setb n=20*12 i=9 pmt=-10000 p/y=12 c/y=1 FV=?6434561
Total fund at 21st =15482223
Transfer to debt fund for 6yr@7% = 23234642
Shortfall= 23234642-61052403=37817761
ANSWER: 37817761

Sum:18
1.Transfer to debt fund once SIP is completed till retirement
SIP in Eq.mf
Setb n=10*12 i=11 pmt=-15000 p/y=12 c/y=1 FV=? 3186446
Seb b n=16 i=7 pv=-3186446 fv=? 9406910
SIP in Bal.mf
Setb n=20*12 i=9 pmt=-10000 p/y=12 c/y=1 FV=?6434561
Set b n=6 i=7 pv=6434561 fv=? 9656541
Total=19063451
Shortfall= 19063451-61052403=41988952
ANSWER: 41988952

Sum:19
Retirement corpus
Find Fv of pv(60000) @ 5.5 for 26yr = 241388
Find PV of pmt(241388) for 25yr @ ROR 1.07/1.055 = 61052403
AT 70 1cr
Find pv of FV(1cr) for 10yr @ 7% = 5083493
AT 85 1cr
Find pv of FV(1cr) for 25yr @ 7% = 1842492
Compromise 10% of retirement corpus
61052403*10% = 6105240
Grow for 10yr at 70 @ 7%
Setb n=10 i=7 pv=-6105240 fv=? 12009931
At 70, 12009931-10000000=2009931
Grow for 15yr at 85 @ 7%
Setb n=15 i=7 pv=-2009931 fv=? 5545463
Shortfall=10000000-5545463=4454537
ANSWER: Shortall of approx. 45lac

Sum:20
How much % reduction is required?
Retirement corpus=61052403
AT 70 1cr
Find pv of FV(1cr) for 10yr @ 7% = 5083493
AT 85 1cr
Find pv of FV(1cr) for 25yr @ 7% = 1842492
Reduce PV of both 1cr from retirement corpus
61052403-5083493-1842492=54865093
At 60,find pmt of PV
Set b n=25*12 i=1.07/1.055 pv=-54895093 p/y=12 c/y=1 pmt=? 214004
Disc for 26yr @5.5% of FV(214004) pv=? 53193
% reduction
(60000-53193/60000)*100=11.34%
ANSWER: 11.34%

Sum:21
1.Sanjay buy new car after 6months cost 6 lac (then cost)
2.Sold car for 1.5lac
3.2% processing charge
4.Loan for 24EMI
600000-150000=450000
450000*2%=459000
Set end n=24 i=11.75 pv=459000 pmt=? p/y=c/y=12 = 21553
ANSWER:21553

Sum:22
Mahesh
50000-20
? -100
250000
250000-50000=200000
Set end n=60 i=? pv=200000 pmt=-5750 p/y=c/y=12 =23.96%
EFF=26.78
ANSWER=26.78%

Sum-24
1.Geet higher education
2.Wants post tax lumpsum fund req today in debt fund
Post tax return=R*(1-tax rate)
7*(1-10.3%)
6.279
Find NPV of cashflow
R=1.06279/1.10
Cashflow
1-4=0
5-8=100000
NPV=483704
ANSWER: 483704

Sum:25
1.Take a loan of 50lac
2.Want to buy flat in US=80lac cc , grow@2.5% p.a
3.He utilize 99 lac & invest in risk free
4.He start SIP in Rf yielding 5% above rf till roshan age 18
Additional req at 18
1.3cr-50lac=80lac
US flat after 4yr
Setb n=4 i=2.5 pv=-80lac fv=? 8830503
Total amt req=80L+8830503=16830503
Invest 99 lac in riskfree for 4yr=12736017
Monthly SIP req
Set b n=4*12 i=11.5 pv=0 pmt=? Fv=4094486 p/y=12 c/y=1 67766
ANSWER: 67766

Sum:26
1.Gurpreet wants 50K household expense p.m post retirement.
2.Earmarks balfund & invest SIP in equity fund till 1yr to retirement.
3.At 59,invest entire corpus to buy annuity yield 7.5%
Find Fv of pv(50000) @5.5 for 17yr = 124240
Find Pv of pmt(124240) for 25yr @ ROR 1.075/1.055 = 29768291
Disc@ 7.5% for 1yr
Fv=29768291 pv=? 27691433
Existing balance fund=978000
Set b n=16 i=11 pv=-978000 FV=5194055
Add req=27691433-5194055=22497378
Monthly SIP
Setb n=17*12 i=11 pv=0 pmt=? Fv=22497378 ply=12 c/y=1 Pmt=39796
ANSWER: 39796

Sum:28
1.Invest equal amount in equity & debt fund for world tour
2.Withdraw 30% eq corpus & invest in debt fund-2yr prior to trip
3.& withdraw 50% of eq corpus & invest in debt fund-1yr prior to trip
4. Cost 1.5% higher than inflation
Find FV of Pv(10 lac) for 10yr @ 7% = 1967151
Assume 100
Set b n=8 i=11 pv=-50 fv=115
Set b n=8 i=7 pv=-50 fv=86

30% equity fund transfer to debt

Set b n=1 i=11 pv=-80 fv=89
Set b n=1 i=7 pv=-121 fv=129
50% equity fund transfer to debt
Set b n=1 i=11 pv=-45 fv=50
Set b n=1 i=7 pv=-222 fv=185
Total=235
100-235
?-1967151
837086
ANSWER: Lumpsum 837086

Sum:29
Bigger house after 1yr
Setb n=1 i=6.8 pv=-250000 pmt=0 fv=? p/y=c/y=1 FV=267000
100000-267000=733000
Setb n=3 i=4.8 pv=0 pmt=? Fv=733000 p/y=4 c/y=1
Pmt=238661
ANSWER: Quaterly=238661
Sum:30
XIRR
1/4/2010 to 1/12/2010 = -12000
1/4/2011=0
1/4/2012=0
1/4/2013=173000
XIRR=19.28%