Finance Answers

Mr. Kohli is planning to invest in the share market. He wants to study the Balance Sheet of Amul Industries. He wants your guidance in finding the various elements of the Balance Sheet of Amul Industries. Kindly discuss the same

Mr. Rahul has been saving Rs.9,500 at the beginning of every quarter for 25 years at an
average return of 14% p.a. compounded quarterly. He has to set apart Rs.15,00,000 for
his daughter’s marriage and Rs.10,00,000 for his son’s marriage from accumulated sum
after 25 years. He is saving separately for their education and he wishes to withdraw a
certain amount for the next 25 years on the remaining sum. The money accumulated will
be invested at a rate of 8% p.a. How much can he withdraw at the beginning of every
year?

Mrs. Ram has been saving Rs.15,000 per month for the last 5 years and continue to save
the same amount for the next 15 years for her retirement at age 60. The return on
investment is 12% p.a. compounded monthly. If she withdraws Rs.45,000 per month after
retirement (after 15 years) for the next 20 years (i.e. from age 60 to 80), how much money
will she have at age 80? Assume the same rate of interest on post retirement investment
and withdrawal is at the beginning of the month.

Ms. Shruti is 45 years old and plans to retire at 60. Her life expectancy is 80 years. Ms.
Suman her Financial Planner, estimates that her client will require Rs.540,000 in the first
year after retirement. Inflation rate is 6% p.a. and the rate of return is 10% p.a. What will
be the savings per year required in order to meet this?

Ms Ananaya wanted to have a retirement corpus of Rs.1.5 Crores. She has 18 years to go
for retirement. But now she wants to retire 3 years earlier. What is the additional amount
that she needs to invest each year if the rate of return is 8%?

A twenty-year-old decides to save Rs.1,000 per month into a retirement account that will
mature when she will turn 65. How much will she accumulate assuming that the she gets
a return @12% per annum compounded monthly? How much will a 40-year-old get if he
makes a similar investment? How much more does he need to invest to get the same
amount?

Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?

You recently accepted an assignment with Oxford Limited as a financial consultant. One of your first assignments is the analysis of two proposed capital investment projects. Details of initial investments, after-tax cash flows and average annual profits are represented below:
Year After-tax Cash flows

Initial investments
Cash flows



Average annual profits

1
2
3
4 Project A Project B
(R50 000)
R26 200
R12 200
R12 200
R5 000
R1 400 (R50 000)
R14 200
R14 200
R14 200
R14 200
R1 700


2.1. Which project has a shorter payback period? Motivate your answer by doing the relevant calculations (answers expressed in years, months, and days).

Calculate the present value of a growing perpetuity with the following information (round off the answer to the nearest rand):


Cash flow at the end of the first year R60 000
Growth rate (g) 10%
Opportunity cost 20%