Assignment on Time Value of Money

1.A sum of Rs. 50,000 is invested at a rate of 5% pa. After 7 years the rate of interest was changed to 5%
pa compounded half yearly. After a further period of 3 years, the rate was again changed to 6% pa
compounded quarterly. Find the accumulated amount at the end of 15 years from commencement?

Practice for sum 8

2. A person aged 28years has a yearly expense of Rs. 350000 which he thinks would grow @7% pa. He
would also like to increase his lifestyle every year by 3%. He wishes to retire at 55 and expects to live till
65 years of age just like his father did. The returns on his investments during his earning life would be
10% as he believes to be an aggressive investor. The inflation post retirement would be @ 5% and he
would get a return of 8.5% in the same period, as he would be conservative in that phase of life. He
would like to know how much amount he should have at the time of retirement?

3. Ms Reshma is 35 years old and plans to retire at 50. Her life expectancy is 60 years. Ms Zarina her
Financial Planner , estimates that her client will require Rs. 65000 in the first month after retirement.
Inflation is 3% pa and the rate of return is 5% pa. What will be the savings per year required in order to
meet this?

4. Rahul has to accumulate money to buy a car worth Rs. 560000 after 4 years. He wishes to invest
money at the beginning of every quarter for the first 3 years and he cannot save any more money after
that. Calculate the amount of saving required every quarter if the rate of return on investments is
14.25% pa.

5. Mira aged 30 saves Rs.15000 per year (at the end) in bank FD earning 8.25% pa. compounded
annually until she retires at 58. Life expectancy is 80 years . What will be the corpus on the date of
retirement? What is the fixed amount she can withdraw at the beginning of each year until 80 in case
she wishes to exhaust her corpus completely?