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PROJECT
FINANCIAL PLAN
FOR
MR. VIPIN CHIMRANI
SUBMITTED TO
PREPARED BY
DISHA SAXENA
PGDM-M (2018-20)
JN180269
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ASSUMPTIONS
Certain assumptions taken while preparing this financial plan for Mr. Vipin Chimrani are-
The financial plan is created based upon current financial conditions and goals
The average inflation rate taken is 8% p.a.
Expectation of increase in salary is 12% p.a.
Children’s education fee is taken at a growth of 10% p.a.
Other goals increase is 8% p.a.
Retirement age is 52 years (for both) and annuity rate is taken as 7% p.a.
Mr. Vipin and his wife are expecting the post retirement life of 25 years each
PERSONAL DETAILS
Name- Mr. Vipin Chimrani
Age- 35 years
FAMILY DETAILS
FINANCIAL GOALS
Goal Name Years to Goal Present Cost of Goal Inflation Rate (%)
(Rs.)
Vridhi- Graduation 12 32,00,000 10%
Vyom- Graduation 14 32,00,000 10%
Retirement 17 7,00,000 p.a 8%
Education fund 15 10,00,000 10%
Vridhi- Marriage 20 10,00,000 8%
Vyom- Marriage 25 10,00,000 8%
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Vacation 1 2 5,00,000 8%
Vacation 2 7 5,00,000 8%
Note: It is important to diversify the sources of income so as to reduce the risk. In your case
income is spread across multiple sources, which is good.
EXPENSES
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INSURANCE & INVESTMENTS
SAVINGS
The average savings of an Indian household is around 30% of the household income. In this case,
the savings rate is much higher.
RISK PROFILE
My client is an ‘Aggressive Investor’, as known through my interaction with him.
He is ready to take high risks so as to generate high return. His primary goal is growth of capital.
65% in Debt
30% in Equity
5% cash
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But based on the risk profile, my suggestion would be:
68% in Equity
22% in Debt
10% cash
NETWORTH
Assets Liabilities
Asset Type Amount (Rs.) %age Liability Type Amount (Rs.)
Fixed Assets 1,19,25,000 75% Regular expenses (also life 600000
insurance premium)
Financial Assets 34,25,500 21% One time future expenses (after 5000000
10 years) (future value)
Other Assets 6,00,000 4% One time current expense 1300000
Total 1,59,50,500 100% Total 69,00,000
Financial Assets
Equity 10,27,650 30%
Debt 22,26,575 65%
Cash 1,71,275 5%
Total 34,25,500 100%
GOALS
VACATION 1-
Present Cost (PV) = Rs. 5,00,000
No. of years (n) = 2
Rate (r) = 8% p.a
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VACATION 2-
Present Cost (PV) = Rs. 5,00,000
No. of years (n) = 7
Rate (r) = 8% p.a
VRIDHI GRADUATION-
Present Cost (PV) = Rs. 32,00,000
No. of years (n) = 12
Rate (r) = 10% p.a
VYOM GRADUATION-
Present Cost (PV) = Rs. 32,00,000
No. of years (n) = 14
Rate (r) = 10% p.a
VRIDHI MARRIAGE-
Present Cost (PV) = Rs. 10,00,000
No. of years (n) = 20
Rate (r) = 8% p.a
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VYOM MARRIAGE-
Present Cost (PV) = Rs. 10,00,000
No. of years (n) = 25
Rate (r) = 8% p.a
EDUCATION FUND-
Present Cost (PV) = Rs. 10,00,000
No. of years (n) = 15
Rate (r) = 10% p.a
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Present Value = Rs. 3,86,000 (PV) + 55,000 p.a
No. of years (n) = 8
Expected rate of return (i) = 8%
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Future value of investment (Rs.) = PV*{(1+r)^n}
= 4,31,311*{(1+0.06)^1}
= Rs. 4,57,189.66
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So, future value of 53,000 (Rs.) = PV*{(1+r)^n}
= 53,000*{(1+0.06)^14}
= Rs. 1,19,827.9
Total Future value of Investment 1 (Rs.) = 14,39,062.038 + 1,19,827.9
= 15,58,889.9
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For education fund, current investments can be made as such-
INSURANCE PLANNING
Income (in Rs. p.a.), A 27,00,000
Current age (years) 35
Retirement age (years) 52
so, the person will work for (years), n 52 – 35 = 17
Inflation rate (IR) 7%
Return on investment (NR) 12%
Existing life insurance policy (Rs.) 2,00,00,000
TO CALCULATE
Insurance needed as per Human Life Value
Approach
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Insurance Policy Needed
Using formula Present Value - Existing life insurance policy 11197527.5
GIVEN
Gratuity 498060
EPF 120000
Shares and debentures 200000
Property 11925000
Life insurance policy 20000000
OUTFLOW
Regular expenses (also life insurance premium) 600000
One time future expenses (after 10 years) (future value) 5000000
One time current expense 1300000
Inflation rate (IR) 7%
Return rate (NR) 12%
TO FIND
Insurance cover needed using Capital Need Analysis
SOLUTION
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Using formula
Annuity factor 1/((1+i)^n) 0.146879
678
Present Value A*((1-Annuity factor)/i) -
3833922
7.3
Calculating sum of
Present value of gap + Present value of financial goal + -34497480.83
One time current expenses
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