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Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wants to receive a fixed monthly sum of amount for his rest of life, starting after one month and there after he wants pass the same to future generation. He expects to earn an interest of 9% compounded annually. Determine how much perpetuity amount he will receive every month?
(a) Rs. 9,500/-
(b) Rs. 38,500/-
(c) Rs. 37,500/-
(d) Rs. 36,600/-?
Most Upvoted Answer
Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wan...
Understanding the Problem
Mr. Sharad has a retirement benefit of Rs. 50,00,000 and wants to withdraw a fixed monthly amount for his lifetime while ensuring the principal amount can be passed on to future generations. The interest rate is 9% compounded annually.
Calculating Monthly Withdrawals
To determine the monthly amount he can receive, we need to use the formula for the present value of a perpetuity:
- Annual Interest Rate: 9%
- Monthly Interest Rate: 9% / 12 = 0.75%
- Present Value (PV): Rs. 50,00,000
The formula for the present value of a perpetuity is:
PV = Payment / Monthly Interest Rate
Rearranging gives us:
Payment = PV * Monthly Interest Rate
Calculating Payment
- Monthly Interest Rate: 0.0075 (which is 9% / 12)
- Payment Calculation:
- Payment = 50,00,000 * 0.0075 = Rs. 37,500
Final Decision
The monthly amount Mr. Sharad will receive is Rs. 37,500. This amount allows him to enjoy a steady income while preserving the principal for future generations.
Conclusion
The correct option for Mr. Sharad's monthly withdrawal amount is:
- Option (c): Rs. 37,500
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Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wants to receive a fixed monthly sum of amount for his rest of life, starting after one month and there after he wants pass the same to future generation. He expects to earn an interest of 9% compounded annually. Determine how much perpetuity amount he will receive every month?(a) Rs. 9,500/-(b) Rs. 38,500/-(c) Rs. 37,500/-(d) Rs. 36,600/-?
Question Description
Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wants to receive a fixed monthly sum of amount for his rest of life, starting after one month and there after he wants pass the same to future generation. He expects to earn an interest of 9% compounded annually. Determine how much perpetuity amount he will receive every month?(a) Rs. 9,500/-(b) Rs. 38,500/-(c) Rs. 37,500/-(d) Rs. 36,600/-? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wants to receive a fixed monthly sum of amount for his rest of life, starting after one month and there after he wants pass the same to future generation. He expects to earn an interest of 9% compounded annually. Determine how much perpetuity amount he will receive every month?(a) Rs. 9,500/-(b) Rs. 38,500/-(c) Rs. 37,500/-(d) Rs. 36,600/-? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. Sharad got retirement benefit amounting to Rs. 50,00,000/-. He wants to receive a fixed monthly sum of amount for his rest of life, starting after one month and there after he wants pass the same to future generation. He expects to earn an interest of 9% compounded annually. Determine how much perpetuity amount he will receive every month?(a) Rs. 9,500/-(b) Rs. 38,500/-(c) Rs. 37,500/-(d) Rs. 36,600/-?.
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