RE Exam
RE Exam
RE Exam
Notes:
Further, Rohin shall also receive a performance bonus of Rs. 60,000 from his employer for this year. Ro
In addition to this, Rohin Contributes to Employee Provident Fund Rs. 4,800 monthly and also pay
policies and 1 unit linked policy. The total life insurance cover under his bouquet of policies is Rs.
medical claim policy.
Assets of Rohin
Amount
Particulars
(in Rs.)
Plot of land (at native place) Present Market Value 200,000
ESOPs Present Market Value 1,600,000
Equity Shares Present Market Value 26,000
Equity Mutual Funds Present Market Value 80,000
Rohin currently has Rs. 4,80,000 outstanding towards his personal loan balance, for which the EMI
Rohin's father has retired from his job. He is not financially dependent on Rohin as he has opted f
their own house in Bhuj, which is in the name of his father, Dhananjay Kumar. His father receives a
With additions to his family, Rohin intends to plan his finances and wants to achieve his financia
Financial Goals*
1. To buy a house within 1 year; valued approximately Rs. 35 lakh
2. To buy a car within the next 2 months; valued approximately Rs. 4.50 lakh.
3. To make provision for children’s higher education expenses for both children at their age of 21 in lum
4. To make provision for children’s marriage expected at the end of 20 years and 25 years from now; p
5. To provide for a comfortable retirement at his age of 55.
(*expressed in today’s values.)
Assumptions:
1. Risk Free Rate of Return = 4% p.a.
2. Rate of return on Equity = 15% p.a.
3. Rate of return on Debt above 5 years (long term) = 9% p.a.
4. Rate of return on Debt in 1 to 5 years (medium term) = 10% p.a.
5. Rate of return on Debt in less than 1 year (short term) = 5% p.a.
6. Inflation = 4% per year.
Questions:
1. You have pointed out to Rohin that presently he is not adequately covered under life insurance
an amount of Rs. 6 lakh p.a., inflation linked, starting from Feb 2018, till Kashish is alive. What app
would be invested in long term debt and long term equity in the ratio 80:20 till Kashish’s age 45 a
period till her life expectancy. (Assume Investments are made at the end of the month)
2. Rohin wants to invest yearly to achieve his goals for his children's higher education. For accumu
starts investing from 1st of Feb 2018, what approximate amount should he set aside in the beginn
for Mayur and Mohin and invests till they turn 21 years of age respectively. Also, investments are m
3. Rohin’s father receives a fixed pension of Rs. 15,000 at the beginning of every month. His household
Nationalized Bank under Reverse Mortgage Scheme. He was offered fixed monthly payments at the be
value of his home. He meets his annual expenses as increased by 4% inflation every year and invests th
investment yielding 10% p.a. at the end of every year starting from this year onwards. Rohin wants to k
Expenses are done in the begin mode).
Solution:
orate as a project manager for the last 7 years in Ahmedabad. He is presently staying in an unfurnished accommodation
use wife. They have two children - Mayur (aged 5 years) and Mohin (aged 2 years).
ployer for this year. Rohin has also been recently rewarded by his employer with a good number of ESOPs.
monthly and also pays Rs. 23,900 annually as premium of his life insurance policies, which consist of 3 endowment
quet of policies is Rs. 12,00,000. Rohin and his family are also insured for their medical expenses under his company’s
nce, for which the EMIs have been included in his current expense structure.
ohin as he has opted for reverse mortgage scheme from a Nationalized Bank. At present, Rohin’s parents are residing
r. His father receives a fixed pension each month.
to achieve his financial goals within their time horizons.
d under life insurance. Considering that he meets an immediate unforeseen event Rohin would like to provide his fam
hish is alive. What approximate amount of life insurance should Rohin be covered for if the proceeds of such a cover
till Kashish’s age 45 and the ratio would change to long term debt and long term equity to 90:10 for the remaining
he month)
education. For accumulation of fund you recommend Rohin to invest in Debt and Equity in the ratio 20:80. If Rohin
et aside in the beginning of every year to achieve his said goals. Assume Rohin maintains separate investment accoun
Also, investments are made in equity and long term debt.
month. His household expenses have exceeded his pension of late and are Rs. 16,000 per month now. He had approached
hly payments at the beginning of every month for 15 years at a rate of interest of 11.75% per annum. on Rs.40 lakh eligible
very year and invests the excess amount from his two fixed annuities i.e. fixed pension and reverse mortgage stream, in an
wards. Rohin wants to know the accumulated fund against the total liability under Reverse Mortgage after five years. (Month
30 Marks
urnished accommodation
er of ESOPs.
consist of 3 endowment
enses under his company’s
Rohin’s parents are residing in
Mr. Avinash purchased a flat worth Rs. 50 lakh in January 2007 by availing a housing loan of Rs. 35 lakh
rate of 9% p.a. The value of his flat as in January 2013 has appreciated to Rs. 90 lakh. What approximate
a)
can he consider in his flat towards his unencumbered interest after also setting aside 15% of the apprec
taxes and other costs to be discharged on selling the unit? End Mode
Shantanu opened a PPF A/c on 28th March 2020. For the initial 10 years he will be investing maximum
beginning of each financial year. For the next five years, he will be investing Rs. 70,000 semi-annually at
He will extend his account for 3 blocks after the initial maturity. For the first block of extension he will in
month at the end of the month. For the 2nd block of extension, he will contribute Rs. 2,000 each quarte
b) quarter. For the third extension block, he will contribute Rs. 500 each month at the end of each month.
PPF is expected to give a return of 7.9% p.a. For the next 5 years PPF is expected to give a return of 7.68
PPF rates will subside by 0.5% for every block. Calculate the amount available in his PPF account at the
He has to withdraw Rs. 10 lakh in (current cost)at the end of initial Maturity to meet downpayment for h
5.5% p.a. through out. Real Estate appreciates at 7.5% p.a.
Solution:
2*10 Marks = 20 Marks