Q$.$No$.5($i$)$

Marks $2$

The Vermas $($Mr$.$ Sujat and Mrs$.$ Sheetal Verma$)$ plan to create an education fund for their newborn

daughter. They expect their kid to start college $18$ years from now. The current annual cost for a $4-$

year college program starts at Rs $275,000$ p$.$a$.,$ which they expect to rise at an annual rate of $5$

percent. They assume that their investment will earn $8\mathrm{.}5$ percent annually. How much must they put

aside each year, starting next year, if they plan to make $17$ equal payments? Note: The fee changes

every year.

Q$.$No$.5($ii$)$

Marks $4$

Ms$.$ Sanjana Agrawal is a recent BE $($ECE$)$ graduate who has received a college placement worth CTC

Rs $24$ lakhs. She is $22$ years old $($at $t=0)$ but plans to retire at age $63($at $t=41).$ Her strategy is to

start a yearly SIP by contributing Rs $400,000$ annually for the next $10$ years $(t=1$ to $t=10).$ During

these ten years, she expects a significant career boost and achievement of several of her life goals.

Based on her lifestyle and future cost of living calculations, she wishes for a retirement income of Rs

$25,000,000$ per year for $20$ years, with the first retirement payment starting at $t=41.$ How much

must Ms$.$ Sanjana save yearly from $t=11$ to $t=40$ to achieve her retirement goal? Assume she plans

to invest in a blue chip mutual fund that will earn $10$ percent per year on average.