Section C (4 Mark)Mr.

Section C (4 Mark)

Mr. Mahesh Chabaria, aged 52 years, currently owns an transport firm. His family consists of his wife Nitika, also aged 52 years, son Manish aged 29 and daughter Nidhi aged 27. Nitika is a housewife and both the children are happily married and well settled. The couple anticipates their life expectancy to be 80 years each.

Income and Expenses:

The gross annual income of Mahesh for the previous year 2007-08 is expected to be Rs. 1000000. The couples’ household expenses are estimated to be Rs. 32000 per month. Taking into account incidental expenses of another Rs. 5000 the net expenses of the family are estimated to be Rs. 37000 per month for the previous year 2007-08. Mahesh has a net saving of Rs. 1800000 which he would like to invest for his post retirement purposes.

Assets Allocation:

Mahesh has hardly 8 years left for retirement and thus he is not very aggressive in his investments. Returns of his portfolio based on asset allocation during the accumulation and distribution phase are calculated as below:

Assumptions: