NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products
Mr. Sharma, aged 58, has a corpus of Rs 1,00,00,000 at retirement. He buys a single life annuity at an annuity rate of 6% per annum, paid annually at year end, from a Rs 40,00,000 portion, and keeps the remaining Rs 60,00,000 invested. The invested portion earns 8% per annum and he withdraws exactly the interest yearly. Ignoring tax, what is his total annual income from both sources?
His total annual income is Rs 7,20,000. The annuity gives 6% on Rs 40,00,000, which is Rs 2,40,000, and the invested balance gives 8% on Rs 60,00,000, which is Rs 4,80,000. Adding both sources gives Rs 7,20,000.
- ARs 7,20,000Correct
- BRs 2,40,000
- CRs 4,80,000
- DRs 6,00,000
Explanation
Annuity income = 6% of 40,00,000 = Rs 2,40,000. Interest on the invested portion = 8% of 60,00,000 = Rs 4,80,000. Total = 2,40,000 + 4,80,000 = Rs 7,20,000. Rs 6,00,000 wrongly applies 6% to the whole corpus; Rs 2,40,000 and Rs 4,80,000 count only one source.
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