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IAI - March 2021 paper

B

Bharti Singla

Senior Member
Hi all,
I have few doubts in IAI March 2021 paper:

1. It is mentioned that if Ms. Bee chooses to buy annuity at retirement, she will get the below benefits:
  • Rs. 164,286 pa with purchase price of Rs. 2,500,000
  • Rs. 110,072 pa with purchase price of Rs. 1,675,000
Below that, two tables are provided which shows the income streams of Income drawdown product. In the first table, the annual withdrawal income is shown as Rs. 150,000. Shouldn't it be Rs. 164,286, as the purchase price is Rs. 2,500,000?

2. In the solution, a table is given which shows for how many years the person will get the annual income under each interest rate.
For second option where the purchse price is Rs. 1,675,000; the person would get income for 19, 21 and 26 years for interest rates 3%, 4% and 5% respectively.

How it is 21 years for interest rate 4%? In the table, it seems that the last positive cashflow is at 22 years ( Rs. 7,102) not 21 years.

Could anyone please clarify?
 
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