Answer to Question #195140 in Management for Sanskriti

Question

Assume that your father is now 55years old and plans to retire after 5years from now. He is expected to live for another 15years after retirement. He wants a fixed retirement income of Rs. 1,00,000 per annum. His retirement income will begin the day he retires, 5years from today, and then he will get 14 additional payments annually. 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 today to meet his retirement goal?

Answer 1

Expects to earn 100000 which is 10%

Then 100% will be (100%X100, 000)/10%) = Rs1, 000,000

He is expected to have paid a savings of Rs 1,000,000 which when divided with the remaining 5 years we get what he is supposed to pay annually as premiums.  = Rs 200,000