NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products
Mr. Arvind Shetty, aged 62, retires with a corpus of Rs 1,00,00,000 and buys an immediate annuity with Rs 40,00,000 of it, which pays Rs 2,80,000 per year. He keeps Rs 60,00,000 invested in a debt fund assumed to earn 7% per year, and plans to withdraw only the return each year, leaving the principal untouched. What is his total annual pre-tax income from both sources?
The total annual pre-tax income is Rs 7,00,000. The debt fund earns 7% on Rs 60,00,000, which is Rs 4,20,000, and this is added to the annuity of Rs 2,80,000.
- ARs 4,20,000
- BRs 7,00,000
- CRs 6,80,000
- DRs 5,80,000Correct
Explanation
Return on the debt fund = 7% of Rs 60,00,000 = Rs 4,20,000. Add the annuity of Rs 2,80,000 to get Rs 7,00,000. Rs 4,20,000 alone ignores the annuity, and Rs 6,80,000 and Rs 5,80,000 come from arithmetic slips.
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