How to calculate retirement benefit



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kindly let me know how to ans following quetion as not shown in video


Satyam receives Rs. 10 lakhs on his retirement. He invests this at the rate of 10% p.a. If he withdraws Rs. 15,000 at the end of every month to meet his personal expenses, how many years will the corpus sustain ? 3/3 Just over 8 years - Correct
More than 10 years
Less than 7 years
Till his life time

3 Answer(s)


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Hi. If you're using FC-200V calculator, do the following.

CMPD : Set = End, N=?, I = 10/12, PV = -10,00,000 , PMT = 15,000, FV = 0 and solve. You'll get answer as 97.716 which is in months. If you divide the same by 12, you'll get 8.14 years, which is just over 8 years.
Note: The same calculations can be carried out in Excel sheet, using the formula NPER and feeding the same value, except changing the rate as 10%/12.
Let me know if you still have doubt.

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OK I GOT IT PLS TELL ME WHY WE PUT -IN PV

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We put -ve sign because we need to differentiate between cash inflow and cash outflow. Here in question, his outflow is Rs. 10 lakhs but every month he'll receive Rs. 15,000 that becomes his inflow. Even if you treat the sign other way, you'll get the correct answer. But the convention is to treat the PV as -ve. Also, if one makes monthly investments, the PMT will be -ve as this is also cash outflow the investor.

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