As an investment advisor, you have been approached by a client called Shyam for advice on some financial matters. Shyam

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As an investment advisor, you have been approached by aclient called Shyam for advice on some financial matters. Shyam is35 years old and has Rs. 200,000 in bank. He plans to work for 25years and retire at the age of 60. His present salary is Rs.400,000 per year.
Shyam has decided to invest his bank balance and futuresavings in a balanced mutual fund scheme which he believes willprovide a return of 10 percent per year.
Shyam seeks your help in answering several questionsgiven below. In answering these questions, ignore the taxfactor.
Once he retires at the age of 60, he would like towithdraw Rs. 600,000 per year for his consumption needs for thefollowing 20 years (his life expectancy is 80 years). Each annualwithdrawal will be made at the end of the year and rate of interestwill be 10 percent How much should he require at retirement to meethis retirementneed?
(7marks)
How much should Shyam save each year for the next 25years to be able to withdraw Rs. 600,000 per year from thebeginning of the 26th year for a period of 20 years? Assume thatthe savings will occur at the end of each year. Remember that healready has some bank balance. Give the answer to the nearest‘000. (6 marks)
Suppose Shyam wants to donate Rs. 500,000 per year inthe last 5 years of his life to a charitable cause. Each donationwould be made at the beginning of the year. Further, he wants tobequeath Rs. 4,000,000 to his son at the end of his life. How muchshould he have in his investment account when he reaches the age of60 to meet this need for donating and bequeathing? Approximate itto the nearest ‘000. (7 marks)
Shyam wants to find out the present value of hislifetime salary income. Assume that his current salary of Rs.400,000 will be paid annually. What is the present value of hislife time salary income, if the discount rate applicable to thesame is 9 percent?