Cash Flow Statement

Inflows:
Monthly take home Salary 1950
TOTAL INFLOWS 1950

Outflows:
Fixed Outflows
Rent 650
Loan Payment 80
Auto Insurance 230 960

Variable Outflows
Food 345
Telephone Bill 65
Payment for electricity 90
Lunches and Parking 180
donations 70
cloth purchasing 110
Restaurant Spending 130 990
TOTAL OUTFLOWS 1950

CASH FLOW 0
 Net Worth Statement
Liabilities Assets

Short Term Liabilities Liquid Assets

Credit Card Balance 235 235 Cash in check in account 450
Saving Bank Account 1890 2340

Personal Assets
Long term Liabilities Automobile 7800
Education Loan Balance 2160 2160 Household Possessions 3400
Stereo Equipment 2350
Home Computer 1500 15050

Investment Assets
Stock Investment 860 860

Real Estate 0

Total Liabilities 2395 Total Assets 18250

NET WORTH
Total Assets 18250
Less: Liabilities 2395
Net Worth 15855
 Cash Flow Statement

Inflows:
Monthly take home Salary 3165
TOTAL INFLOWS 3165

Outflows:
Fixed Outflows
Rent 880
Savings 250
Auto Insurance 280 1410

Variable Outflows
Food 560
Utilities 180
Automobile Expenses 480
Lunches and Parking
donations
cloth purchasing 300
Personal and Other Items 235 1755
TOTAL OUTFLOWS 3165

CASH FLOW 0

1550
2915
-1365
 Net Worth Statement
Liabilities Assets

Short Term Liabilities Liquid Assets

Credit Card Balance Cash in check in account
Saving Bank Account

0 Personal Assets
Long term Liabilities Automobile
Education Loan Balance Household Possessions
Stereo Equipment
Home Computer

Investment Assets
Stock Investment

0
Real Estate

Total Liabilities 0 Total Assets 0

NET WORTH
Total Assets 0
Less: Liabilities 0
Net Worth 0
 A (30 B
Years) (33 Years)
Current/Liquid Assets
•Savings account Balance 400000 17000
•Surrender value of Insurance 5000 0
Total 405000 17000
Personal Assets
•Market value of automobile 300000 300000
•Furniture 500 15000
•Home computer 7000 7000
•Jewelry 500000 500000
Total 807500 822000
Investment assets
•Stocks 20,000 20,000
•Mutual funds 55,000 55,000
•FDs 3000000 100000
•PF/PPF 200000 125000
Total 3,275,000 300,000
Advance for house
Real Estate 0 3000000
Total Assets 4,487,500 4,139,000

Current Liabilities
•Credit card Balances 15,000 45000
•Balance due on auto loan/ home loan 7891 35000
•Medical bills due 0 0
22,891 80000

Long Term Liabilities

• Mortgage 1500000
•Student loan 14,000
•Balance due on auto loan 300,000 300000
314,000 1800000
Total Liabilities 336,891 1,880,000

NET WORTH 4,150,609 2,259,000

A B
R (40 K
Years) (50 Years)
R (40 Y) K (50 Y)
215000 128000
76,000 25000
291,000 153000

800000 775000
500 15,000
11,000 3,000
1500000 3000000
2311500 3793000

400000 5000000
75,000 310000
200000 200000
1200000 2500000
1,875,000 8010000

30,000,000 22500000
34,477,500 34,456,000

3000 15,000
0 110981
0 0
3000 125,981

0 5000000

0 112000
0 5112000
3,000 5,237,981

34,474,500 29,218,019

R K
1. Sum on retirement
Mr Ram spends Rs. 3,60,000 per annum to meet his annual living expenses
He wishes to maintain the same standard of living after retirement which will
be after 15 years. Inflation in the first 5 years is 5% p.a. And in the next 5 years it will be 4.5%
while in the following 5 years it will be 5.5 % p.a. Mr.Ram feels that at the age of 60
most of his commitments such as childrens education and marriage will be fulfilled and
therefore he requires only 75% of the expenses from age 60 onwards
How much money will Ram require at the age of 60 ?

270000 5% 4.50% 5.50%

344596.021875 429429.338248 561247

2. SUM on future planning

Sulekha needs Rs.5,25,000 after 5 years and Rs.10,00,000 after 12 years to meet two goals
of buying a car and a house. The rest of the money required to buy a house will be financedby
her employer. She has a long term horizon and can therefore invest in equity which will provide
her a 15% return on her investments. What is the lumpsum amount she should invest now in
order to meet her two goals at the appropriate time?

Fv 525,000 5 15% PV
fv2 1,000,000 12 15% FV
₹ -261,017.79 R
₹ -186,907.15 ₹ -447,924.94 N
pmt

3.Sum on bond PV
Roop owns a Rs.1000 face-value bond with three years to maturity. The bond makes annual
interest payments of Rs.75, the first to be made one year from today. The bond is currently priced
at Rs.975.48. Given an appropriate discount rate of 10%, should Roop hold or sell the bond?

Face Value 1000 ₹ -937.83

pmt 75
time 3
price 975.48
Rate 10%

Sum 4
Puneet wishes to receive Rs.1,00,000 in 10 years time at an annual interest rate
of 10%, what is the amount of money he has to invest now to achieve his goal?

2.5937424601 100000 38554.328943 PV

 FV 100000
nper 10
rate 10%
Recurring Savingpmt 0

Sum 5
Vishal invested in a corporate bond with a post tax return of 10% and
the inflation rate is 9.87%. What is the real rate of return?

0.13 Real rate 0.118%

(1+return)
(1+inflation)
-1

SUM 6
If Arti needs Rs75000 in 5 years' timefor the down payment of her house
what is the amount she should deposit now assuming an interest rate of 14%
, compounded semiannually?
FV 75000
Time 5 10
Interest Rate 14% 0.07
pmt 0 ₹ -38,126.20

Sum 7
Abhishek started investing with an initial investment of Rs.4000. The investment
is now worth Rs. 18,600. Assuming the annual rate of return on investment
is 6% how many years has abhishek been invested for?
26.3754250608

Initial Investmen -4000

Net 18600 26.3754250608
rate 6%
time

Sum 8
A commercial bank will give you a loan of Rs.75,000 for 2 years to buy a car.
The loan must be repaid in 24 EMIs. The annual interest rate on the loan is 12%
of the unpaid balance. How large are the monthly payments?

pv 75000
fv 0 ₹ -3,530.51 Payment is at the end of the month
r 0.01 but investment is in the beginning of the m
n 24

Sum 9
At the end of a holding period of 3 years, you expect that the share price would be 34.73.
What is the present value of this expected price? Your opportunity cost remains 12%

SUM 10 P/E
If the current market price of Reliance is 1000 and the EPS is 20, what is the P/E?

SUM11 EPS
If the current market price of L&T is Rs800 , net profit is Rs200 crore and the no. of
outstanding shares in the market is 15 crores, what is the EPS?

13.3333333333

Sum 12
Irfan proposes to purchase a property for giving it on rent. (ignore taxation)
He expects to receive Rs55,000 in net receipts each year for 6 years and to sell the property
for Rs.8,50,000 at the end of the 6 year period. If the expected return is 15% what
would be the value of the property?

Years time
Receipt 55000 1 55000 6 ₹ 127,218.34
time1 6 2 55000 5 ₹ 110,624.65
sold for 850000 3 55000 4 ₹ 96,195.34
Rate 15% 4 55000 3 ₹ 83,648.13
5 55000 2 ₹ 72,737.50
6 55000 1 ₹ 63,250.00
 First 5 Years
PV -360000 ₹ -459,461.36 ₹ -572,572.45
FV ₹ 459,461.36 ₹ 572,572.45 ₹ 748,329.29 ₹ 561,246.97
r 5% 4.50% 5.50%
n 5 5 5
pmt 0 0 0

CAR HOUSE
₹ -261,017.79 ₹ -186,907.15 ₹ -447,924.94
525,000 1,000,000
0.15 0.15
5 12
0 0

₹ -38,554.33
the end of the month
t is in the beginning of the month

₹ 553,673.96 ₹ 1,403,673.96
850,000 ₹ -606,846.99
Problem 1
Poonam aged 35 years invested Rs. 100000 in a saving instrument . The interest
during the first 3 years is 8% p.a. and thereafter 6% pa. What amount would
she get on retirement at the age of 58 years?

Investment 100000
time1 3
Rate1 8%
Rate2 6%
time2 20

Problem 2
You determine that you would require Rs2000000 at 58 when you retire.
What is the monthly saving that you need to do if you are 40 today
and the rate of interest is 10% pa

Fv 2000000
n 216
rate 0.833%
₹ -3,302.68

Problem 3
Mr Ram aged 45 saves at 9% pa , Rs200000 at the beginning of the year
for the first 8 years and then stops saving on account of certain financial
problems. On retirement at the age of 65 years, he intends to keep aside
a sum of Rs 500000 out of the accumulated amount of the above savings
as liquid money for emergencies and to invest the balance amount at 6%
pa providing withdrawal of a fixed amount at the beginning of every year
for 20 years . Find the amount of annual withdrawal?
Time
1 200000 20
rate 2 200000 19
9% 3 200000 18
4 200000 17
5 200000 16
6 200000 15
7 200000 14
8 200000 13

Problem 4
Rajesh aged 30 years is working in an MNC and wishes to set aside some
fixed amount at the beginning of each year towards retirement planning.
He is currently spending Rs.240000 pa and wishes to raise his standard of
living by 2% per year until his retirement at the age of 55. The average
rate of inflation is expected to be 3%all these years. If he wants to maintain
90% of his standard of living that he would be enjoying on retirement
assuming no provision for inflation thereafter, then what is the annual
amount of income he should manage for after retirement?
Ans: Rs. 731452
current spending 240000
inflation 3%
standard of living 2%
total 5%
n=25 25.00
pmt 0.00
future Value ₹ 812,725.19
Requirement ₹ 731,452.67

Problem 5
In the above case, if Rajesh's life expectancy on retirement is 25 years
and he wants the same annual income adjusted to inflation as envisaged
in question no. 4 above for all the years in advance after retirement , what
accumulated amount should he have on retirement for such an arrangement?
Assume his investment on retirement would provide a yield of 6%.
Rs13236410.58

Money Required 731452.67

Inflation 3%
time 25
Rate 6%

Real rate 2.91%

Problem 6
Ms Madhu is 40 years old and will retire at 65. Life expectancy is 75 years.
She will require Rs.15000 in the first month after retirement . Inflation
is 4% pa. and rate of return is 7% pa. What is the corpus required to meet
the expenses after retirement . Will the corpus be enough to fund her retirement
if she saves upto Rs.30000 pa at the end of the year?
Rs1565782, y

time
inflation 4% time after retirement
rate of return 7% pmt
real rate 2.88% ₹ 132,422.59

₹ -1,897,471.13
 ₹ -1,565,782.33
enough
Problem 7( an advertisement)
Lifetime Pension Rs1.2lac p.a and 16 lac for your child for just Rs50k pa
plus benefits U/s 80c and 10D

Problem 8
Nirav wants to retire at the age of 45 and he wants to maintain
his present standard of living. He spends Rs 325000 a year. He is
expected to live up to 85 years. Inflation is 4% and the expected return is
7% pa. How can he achieve this? He is at present 30 years old. What
is the nest egg required at age 45 and what amount shall he save
every year to meet this plan? His present investment is Rs.1000000.

Current Spending
Age after retirement 40 time to retire
present investment 1000000
Inflation 4% his 10 lakhs would grow to
Expected return 7%
real return 2.88%

Problem 9
Kalpesh wants to accumulate Rs.50 lacs when he retires. He is 30 years and
wants to retire at 55 years. Interest rate 9% pa and inflation is 5% compounded
yearly to be done on annuity certain basis. After 10 years of his saving
Rs.45000 pa., Kalpesh realises he can now earn 12% pa. on fresh investment
and also maintain a saving amount of Rs72000 p.a. for the rest of the working life
Will he be able to accumulate the amount required? What will his corpus be?

years to retire 25
wants to accumulat 5000000 ₹ 745,213.20
interest rate 9%
inflation 5%
 Initial saving 45000
first cycle 10
After 10 years 12%
New amount after 10 72000

Problem 10 (Practice)
Mr.Bimal who is aged 42 years has got a contractual assignment in UAE
for a period of 15 years. He has been on his assignment for the past 4 years
and has already saved Rs 7lakh every year. He now plans to save
Rs 10 lakhs for the balance period of his assignment abroad and then
come back to India and live a retired life.
A. If his savings earn an interest of 7% pa during the accumulation stage,
how much accumulated money will he have when he returns to India?

Problem 11
B. If his life expectancy is 85 years and the accumulated savings earn a return
of 8% pa. , how much money can he spend per annum to sustain himself for the
balance period of his estimated life span?
Problem 12
If the estimated expenses for his family are Rs.360000pa. And the rate
of inflation is 6%, then how long will his accumulated savings last?

Problem 13
Rupinder aged 28 years has opened a PPF in State Bank of patiala and deposits Rs5000
in his account every month out of his income. He will retire at the age of 60 years. PPf gives
him an average return of 8.5% . On retirement he will also get a gratuity of Rs.9 lacs after tax
deductions. He plans to invest the retirement corpus and PPF maturity amount available in an FD
bearing 9.25% pa interest.At present he spendsRs2.4 lacs annually and the inflation rate is 9%.
After retirement he would require 90% of pre-retirement expenses. Does he have to save more
to take care of retirement need? Life expectancy be assumed as 85 years.

present age 28 pmt 5000

retire age 60 nper 384
nper 32 rate 0.708%
rate 8.50% Fv of savings ₹ 9,977,566.24
gratuity amount 900000
Total ₹ 10,877,566.24

Problem 14
Sushil has an accumulated amount of Rs.75 lakhs at the time of his retirement.
Also just before retirement, his household expenses are Rs.2.4 lakh pa
and he wishes to maintain the same standard of living after retirement .
If inflation is 6.5%pa and interest on investment is 9% pa , how long would this
money last if he gives Rs25lakh to his son out of the accumulated amount?

Problem 15
Kalpesh decides to accumulate Rs50 lakh when he retires. He is 30 years old at present
and wants to retire at the age of 55 years. Assume interest rate is 9% and inflation
is 5%. If Kalpesh could save only Rs.45000 pa for first 10 years, how much does he need
to save for next 15 years to meet his retirement nest egg?
Problem 16
Avinash pays his mortgage of Rs.12 Lakh for 15 years at an interest rate of 1% per month.
Avinash makes the payments on a monthly basis. What is the total amount of interest
Avinash will pay over the term of the mortgage?

Problem 17
Mira aged 30 years saves Rs.15000 per year (at the end) in bank FD earning 8.25% p.a.
compounded annually until she retires at 58. Life expectancy is 80 years. What is 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?
1491654, 137767

Problem 18
What will be the buying power of Rs. 5000 after 15 years if inflation is 8% pa?
Ans: 15860

Problem 19
Rekha is 20 years old and wants to retire at 45. Her life expectancy is 70 years.
She requires Rs55000 in the first month of her retirement. Inflation rate is 4% pa
and the rate of return is 6% pa. What will be the saving per year required in order to meet this
Ans 239081

Problem 20
A client has the need to provide for his childs college education costs. He envisages
that four annual payments of Rs.20000, in current monetary terms would be needed
beginning 15 years from now. Assumimg level of inflation rate at 5% per annum and
that the fund earns 8% pa returns throughout; calculate the present value to be placed
on this liability when carrying out a needs analysis for this client.
Rs51000
Problem 21
The average inflation over the last three years is 8.5% p.a. You invested Rs.1 lakh
in a security 3 years ago which you have redeemed for Rs.1.3 lakh with simple interest.
What real rate have you obtained from investment?

Problem 22
Anupama dreams of owning a car worth Rs5,00,000 five years from now. At present her investments are worth Rs. 1,

Problem 23
Raghav aged 45 spends Rs. 550000 per annum to meet his annual living expenses. He wishes to maintain the same st

Problem 24
Ahmed proposes to purchase a property for giving it on rent( ignore taxation) expecting to receive Rs55000 in net rec
 ₹ 125,971.20 ₹ 404,006.70

Amount Saving Remaining Time 2

₹ 1,120,882.15 ₹ 6,762,229.17 500,000 ₹ 6,262,229.17 20
₹ 1,028,332.25 Rate2
₹ 943,424.08 6%
₹ 865,526.68 Annual Withdrawal
₹ 794,061.18 ₹ -515,065.73
₹ 728,496.49
₹ 668,345.41
₹ 613,160.92
 ₹ 13,236,410.58

25
10 120 nper
15000 0.240% real rate

30000
 325000 ₹ 585,306.64
15 ₹ 14,182,819.48

₹ 2,759,031.54
Required ₹ 11,423,787.93

he needs to save ₹ -424,864.82

₹ -424,864.82

₹ 2,714,426.02
₹ 3,006,236.19
₹ 5,720,662.21
able in an FD

Current spending 240000 interest 9.25% real rate 0.229358%

inflation 9%
spending at retirement ₹ 3,783,198.91
90% of spending ₹ 3,404,879.02
life expectancy years 25

Total Corpus required ₹ 82,825,026.53

 interest.

esent her investments are worth Rs. 1,75,000. How much more should he save every month given that her investments will fetc

ses. He wishes to maintain the same standard of living after retirement at the age of 60. Inflation in the first 6 years is 5%p.a. And

xpecting to receive Rs55000 in net receipts each year for 5 years and to sell the property for Rs.8,50,000 at the end of the
investments will fetch a return of 9% p.a.?

6 years is 5%p.a. And in the rest of the years it will be 5.5% p.a. Raghav feels that at the age of 60 most of his commitments su

the end of the

most of his commitments such as childrens’ education and marriage will be fulfilled and therefore he requires only 60% of the ex
requires only 60% of the expenses from then on. How much money will he require at the age of 60?