AAFM CWM_LEVEL_2 Exam - Topic 4 Question 69 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 69
Topic #: 4

Section C (4 Mark)

Read the senario and answer to the question.

One commonly used method of calculating the total retirement fund necessary on the first day of retirement is to use the present value of an annuity due. The Pandeys' anticipate that their annual retirement income will need to increase each year at the rate of inflation. Based on the following assumption, calculate the total amount needed to be in place when Shanker and Parvati retire (Round to the nearest Rs. 1000)

ARs. 878000

BRs. 887000

CRs. 896000

DRs. 1792000

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Suggested Answer: C

by Josphine at Dec 27, 2023, 02:07 AM

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Xuan

10 months ago

Can someone explain why we use annuity due instead of regular annuities?

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Lynelle

10 months ago

Definitely need to factor in inflation for accurate calculations.

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Helga

10 months ago

Wait, Rs. 1792000? That seems way too high!

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Cristal

10 months ago

I think Rs. 887000 sounds about right!

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Helaine

11 months ago

The present value of an annuity due is key for retirement planning.

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Carey

11 months ago

I feel like I should choose between Rs. 887000 and Rs. 896000, but I can't remember which one aligns with the calculations we practiced.

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Felicidad

11 months ago

I think the key here is to remember that the payments increase with inflation, but I'm a bit confused about how to apply that to the present value calculation.

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Joaquin

11 months ago

This question feels familiar! I think we did a similar one in class, but I can't recall the exact formula we used for the annuity due.

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Brittani

11 months ago

I remember we practiced calculating the present value of annuities, but I'm not sure if I got the inflation adjustment right for this scenario.

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Jovita

11 months ago

Ugh, I hate these annuity questions. They always seem to trip me up. Let me re-read the scenario and see if I can break it down step-by-step. Okay, I think I've got a plan now, but I'll need to work through it slowly and carefully.

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Kirk

11 months ago

This seems straightforward enough. I just need to plug the given values into the present value of an annuity due formula and do the calculation. As long as I don't make any silly mistakes, I think I can get the right answer.

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Albina

11 months ago

Hmm, I'm a bit unsure about how to approach this. I know it's related to annuities, but I'm not sure if I'm remembering the right formulas. I'll need to review my notes carefully before attempting this.

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Rosalyn

11 months ago

Okay, this looks like a present value of an annuity due calculation. I'll need to find the present value factor based on the given inflation rate and number of years, then multiply it by the annual retirement income to get the total amount needed.

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Michal

12 months ago

The duration and start/end dates make sense to me as being tied to the time policy. I'm a bit unsure about the other options, but I'll give it my best shot.

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Elke

12 months ago

I've seen this type of question before. The key is understanding what the target_rule cache is used for. I think I've got a good handle on this.

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Bobbye

12 months ago

I'm a bit confused by the details around the employees who left and are expected to leave. Do I need to account for that in the expense calculation, or just focus on the remaining employees?

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Edward

12 months ago

I'm confused about the MS120 models—didn't they have limitations on stacking, or was it just a particular version?

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