SVKM’s NMIMS

School of Business Management

Programme: MBA Batch: 2022 - 2024

Academic Year: 2023 – 2024 Subject: Wealth Management
Date: 07 December 2023 Time: 11:00 to 13:00 Duration: - 2 Hrs

N.B.:-

1. There are four questions in this paper. All questions are compulsory.

2. Each question carries10 marks.

3. For answering the questions use of this excel book is only allowed.

4. Access to Internet / intranet is prohibited.

5. Each question has been provided in the designated excel sheet for that question.

6. Answer each question in the designated excel sheet for that question.

7. While answering the question don’t leave unnecessary space.

8. Cover your answer area by thick box border in the same way as questions are covered

9. While answering do not change question data.

 Semester: V
Marks: 40
Duration: - 2 Hrs

et for that question.

y as questions are covered

Q1: Mr Rohvir an employee at JCL ltd approached you for his retirement planning. His annual expenses
today are Rs. 10 lakh out of which Rs. 2 lakh are health related expenses and rest of Rs. 8 lakh are
general expenses. However he is committed to change his living standard and thereby reduce the general
expenses to 75% of current general expenses but health expenses are expected to increase by 50%. He is
currently 32 years old and is expected to retire at 65. He life expectancy si 80 years. Expected overall
inflation rate is 5%. The return on retirement corpus is expected to be 7%. You are required to:
a. Solve the case to arrive at inflation adjusted annual expenses of client at the time of retirement. 2 Marks
b.
c. Appraise Rohvir investing
He is currently about the retirement
Rs. 12000 corpus required
pm in large captoequity
finance the expenses
oriented of non-earning
funds which life. to 3 Marks
are expected
generate a return of 12% annually. Ralate and find out if this investment enough to finance his retirement
corpus. 3 Marks
d. Judge the rate of retrun that Rohvir needs so as to finance his retirement corpus adequately,
considering that he can invest only Rs. 12000 pm? 2 Marks
Annual Expense 1000000
Health Related Exp. 200000
General Exp. 800000
Reduced General Exp. 600000
Increased Health Exp. 100000 300000
900000
 Input Data
Annual Expense 1,000,000
Ratio 30%
Reduction in expense 100000
Current Age 32
Retirement age 65
Expected Inflation 5%
Life Expectancy (Years) 80
Rate of Return on Corpus 7%
Expected Rate of return where the savings will be invested 12%

Investment (monthly) 12000

Tenure 12
return on investment 12%
Calculation of Income Required at Retirement
Income Required at Current Value to meet post retirement exp Rs. 200,000
Current Age 32
Retirement age 65
Years to Retire 33
Expected Inflation 5%
Monthly Income Required at Retirement Rs. 1,037,832

Calulation of Retirement Corpus

Monthly Income Required at Retirement $1,037,832.19
Retirement Age 65
Life Expectancy (Years) 80
Retirement Period 15
Rate of Return on Corpus 7%
Inflation Rate 5%
Inflation Adjusted RATE 1.90%
Type 0
Per 1
Months in a year 12
Retirement Corpus Rs. 162,381,355

How much client should save monthly to get Rs. 162,381,355

Retirement Corpus Rs. 162,381,355

Years to Retire 33
Expected Rate of return where the savings will be invested 12%
Type 0
Per 1
Months in a year 12
Amount of monthly savings required to achieve Corpus Rs. 32,196
Q2: Chandan, aged 35 years, is working as a faculty mamber in a management institute with an annual sala
of age of 65 years. His wife is aged 30 years and has a life expectancy up to age 70. He has a life insuranc
Rs.50,000/-
Chandan would like to have an emergency fund of Rs.5,00,000/- and also to create education fund for his t
Rs.10,00,000/- and younger child are Rs.12,00,000/- in todays terms. He will be required to spend on highe
He has an outstanding loan of Rs.10,00,000/- on his house property, currently valued at Rs.80,00,000/-. Be
which Candan agreed.
Chandan wishes to provide the present income to the family for 1 year in case of his untimely death. Then
surviving period of his spouse.
Chandan wants to know whether he is adequately insured, and, in case if not, what is the additional amoun
Demonstrate the use of need based approach and appraise Chandan about the requirement of additional lif
agement institute with an annual salary of Rs. 14,00,000/-. He is married and has two children aged 8 years and 4 years and is ex
y up to age 70. He has a life insurance for Rs 1 Crore at present. Value of his present investments (in his name) is Rs.5,50,000/-

also to create education fund for his two children. In present times, the college expenses for the kind of education he wants for el
He will be required to spend on higher education when the child turns of 18. Education inflation in India on an average is assume
urrently valued at Rs.80,00,000/-. Being a mortgage loan, the bank had insisted for a loan protection insurance at the time of disb

r in case of his untimely death. Then onwards, 75% of his present income till elder child attains age of 18 and 50% of present inc

e if not, what is the additional amount of life insurance required. Assume the rate of return at 8% and average inflation over the n
bout the requirement of additional life insurance.
8 years and 4 years and is expected to retire at the
n his name) is Rs.5,50,000/- and balance at bank is

of education he wants for elder child are

India on an average is assumed to be 5.5%.
n insurance at the time of disbursement of loan to

of 18 and 50% of present income for the remaining

d average inflation over the next 35 years to be 4%.

10 Marks
1 Fund for readjustment Period
Income Required for the Family 100%
NPER 2
PV ₹ 2,646,364.88

2 Funds for dependancy period 75%

NPER 10
PV at year 2 ₹ 8,582,041.28
PV ₹ 7,958,106.87
3 Funds for retirement period of spouse 50%
NPER 28
PV at year 10 ₹ -11,873,846.37
PV ₹ 7,549,295.60

4 Emergency Fund Required 500000

5 Education Fund
For Elder Child
NPER 10
PV ₹ 463,193.49

For Younger Child

NPER 14
PV ₹ 408,553.25

Total Education Fund ₹ 871,746.74

Present Income 1400000
Age of Spouse 30
Life expectancy of spouse 70
Age of elder child 8
Age of younger chils 4
Age at which education fund is required 18
Education expenses for elder child 1000000
Education expenses for younger child 1200000
Total Loan outstanding 1000000
Rate of return 8%
Inflation Rate 4%
Adjusted Rate 3.85%

Fund for readjustment Period ₹ 2,646,364.88

Funds for dependancy period ₹ 7,958,106.87
Funds for retirement period of spouse ₹ 7,549,295.60
Emergency Fund Required 500000
Total Education Fund ₹ 871,746.74
Total Loan outstanding 1500000

Total Funds required ₹ 21,025,514.09

Present Investments:
Bank Balance 50000
Investment 550000
Total value of liquid assets 600000

Amount of insurance required ₹ 20,425,514.09

Less existing insurance cover 10000000
Additional Insurance Required ₹ 17,925,514.09
Q3: Mr. X is a citizen of USA and a person of African origin. Appraise him about his residential status
with the help of the following data of his stay in India for the Assessment Year 2023-24.
F.Y.
2022-23
2021-22
2020-21
2019-20
2018-19

Also assess which of the following incomes will be taxable in his hands:-
Partiulars of Income
Income from house property from Mumbai house
Amount of gift received in Delhi from Indian friend above exemption limit
Income from Denmark Business received in Denmark.Business is controlled from india
Income from sale of agricultural land in Japan
Income earned in Paris in previous yr 2011-12. Remitted in India Now

Investigate about the sensitivity of above income items w.r.t. different residential status one accessee ca
asssume.
out his residential status
2023-24.
Days
71
208
11
70
110

Amount INR
5000000
75000
25000000
30000000
50000

al status one accessee can

10 Marks
 182 Days 60 +365 Either of B1 or B2 7PY (+730 )
F.Y. Days B1 B2 R A1
2022-23 71 NO YES YES NO
2021-22 208 YES NO YES NO
2020-21 11 NO NO NO NO
2019-20 70 NO NO NO NO
2018-19 110 NO YES YES NO
10 PY Resident for 2 years
A2
YES
YES
YES
YES
YES

Partiulars of Income
Income from house property from Mumbai house
Amount of gift received in Delhi from Indian friend above exemption limit
Income from Denmark Business received in Denmark.Business is controlled from india
Income from sale of agricultural land in Japan
Income earned in Paris in previous yr 2011-12. Remitted in India Now

Income Type
Income received in india
Income Accrues in India
Income Deemed to be recived in india
Income Deemed to Accrue or arise in India
Income Other than A1, A2, A3 and A4( From a business controlled from India or Set up in India)
Income Other than A1, A2, A3 , A4 and B1
Earlier income brought now in India
OR NOR ROR RNOR NR Residential Status
NO YES NO YES NO Resident but not Ordinary Resident
NO YES NO NO YES Non Resident
NO YES NO NO YES Non Resident
NO YES NO NO YES Non Resident
NO YES NO NO YES Resident but not Ordinary Resident

Amount INR Taxable/Non-Taxable

5000000 Taxable
75000 Taxable
25000000 Non-Taxable
30000000 Taxable
50000 Non-Taxable

Code Nature
A1 Indian Income
A2 Indian Income
A3 Indian Income
A4 Indian Income
B1 Foreign Income
B2 Foreign Income
O Not an Income
rdinary Resident

rdinary Resident
Q4: Mr. XMan, aged 25, is a manager earning Rs 12,00,000 annually. He is planning to marry Yeti and they plan
11,00,000 in student loans, borrowed at 10% for 8 years, 12 months back, whose repayment starts after 12 months
month. They plan to purchase a home for Rs 1,00,00,000 next year, partly financed by his parents by Rs 50,00,000
on the house and cars totals Rs 20,000 annually. Health and life insurance, cost them Rs 25,000 annually. Mr. XM
and has another Rs 4,00,000 in a equity index mutual fund (12% annual return expected). Mrs. XMan has Gold w
return. She drives a three-year-old Car for which she paid Rs 3,00,000, worth 2,50,000 now and would be worth R
monthly payment for the Car Loan is Rs 10,000. Mr. X drives a six-year-old Car worth Rs 3,00,000 now (Rs, 2,50
of 50,000 for the current year. Income tax at 15% overall for Mr Xman, and nothing for Yeti.

(a) Appriase Mr & Mrs.. Xman about their total assets and liabilities & net worth this year? Next year?
(b) Ascertain the monthly payout on their mortgage?
(c) Examine if Mr Xman take mortgage loan provided the bank only funds upto EMI of 35% of take home salary
would he get the loan?
 techt and owes Rs
,00,000 annually from next
for 20 years. The insurance
count (3.5% annual interest)
d is giving 10% annual
0,000 on her car loan. The
Consider monthly expenses

3+3 Marks
2 Marks
2 Marks
 Net Worth this year
Particulars Assets Liabilities
Home 5,000,000
X's savings account 3,000,000
X's equity investments 400,000
X's gold investments 12,000,000

Y's loan 1,100,000

Total 20,400,000 1,100,000

 Net Worth next year
Net Worth Particulars Assets Liabilities
5,000,000 Home 6,381,408
3,000,000 X's savings account 3,933,869
400,000 X's equity investments 704,937
12,000,000 X's debt investments 19,326,120
-
-1,100,000 Y's loan
-
-
-
-
-
-
19,300,000 Total 30,346,333 -

Monthly Expenses 5 years from now -114,865

Corpus Required ₹ 22,981,097.09

Savings
Salary after tax - Xman 2,000,000

Monthly Expenses -1,800,000

Insurance Expenses -115,000

XMan's Savings 85,000

Saving after tax - Yeti 350,000

Saving interest rate 3.50%

Yeti equity return 14.00%
Xman's equity return 12.00%
Xman's Debt Return 10.00%

Monthly Expenses 5 years from now -114,865

Net return rate 1.9048%
Net return rate - monthly effective 1.8883%
Net Worth
6,381,408
3,933,869
704,937
19,326,120
-
-
-
-
-

-
-
30,346,333

Q4: Mr. XMan, aged 25, is a manager earning Rs 12,00,000 annually. He is plannin
11,00,000 in student loans, borrowed at 10% for 8 years, 12 months back, whose repa
next month. They plan to purchase a home for Rs 1,00,00,000 next year, partly finance
insurance on the house and cars totals Rs 20,000 annually. Health and life insurance, c
annual interest) and has another Rs 4,00,000 in a equity index mutual fund (12% ann
giving 10% annual return. She drives a three-year-old Car for which she paid Rs 3
1,00,000 on her car loan. The monthly payment for the Car Loan is Rs 10,000. Mr. X
paid off. Consider monthly expenses of 50,000 for the current
000 annually. He is planning to marry Yeti and they plan to have one child, Yax. Yeti, 23, is an architecht and owes Rs
2 months back, whose repayment starts after 12 months. She has got a job which will pay her Rs 7,00,000 annually from
000 next year, partly financed by his parents by Rs 50,00,000. Rest they are planning to borrow at 8.5% for 20 years. The
Health and life insurance, cost them Rs 25,000 annually. Mr. XMan has saved Rs 3,00,000 in his savings account (3.5%
ndex mutual fund (12% annual return expected). Mrs. XMan has Gold worth Rs 12,00,000 given by her mother. Gold is
Car for which she paid Rs 3,00,000, worth 2,50,000 now and would be worth Rs 2,25,000 next year. She still owes Rs
r Loan is Rs 10,000. Mr. X drives a six-year-old Car worth Rs 3,00,000 now (Rs, 2,50,000 next year) that is completely
es of 50,000 for the current year. Income tax at 15% overall for Mr Xman, and nothing for Yeti.
 techt and owes Rs
0,000 annually from
5% for 20 years. The
vings account (3.5%
her mother. Gold is
She still owes Rs
) that is completely