Mudassar Inayat Q#1:

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Ali works in an industrial unit. His basic salary is Rs.20, 000 and allowances are 50% of his basic salary. His allowed leaves are given below: Casual Leave = 18 days per year Earned Leave = 18 days per year Sick Leave = 12 days per year Solutions: (a) We are provided with following Information from question Basic Salary = 20,000 Allowances = 50% To calculate the Allowances in terms of money, Using the formula: Amount of Allowances = Percentage of Allowance * Basic Salary = (50/100) * 20,000 = 10,000 Therefore, Amount of Allowances Ali gets is Rs.10,000. To calculate the Gross Salary, Using the formula: Gross salary = Basic salary + Allowances = 20,000 + 10,000 = 30,000 Therefore, Alis Gross Salary is Rs.30,000

Mudassar Inayat

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Now we calculate the cost on account of casual, earned and sick leaves per year, Using the formula: No . of leaves / Total No. of Working Days * Gross Salary Therefore, Casual leaves = (18/26) * 30,000 = 20,769.23 Earned leaves = (18/26) * 30,000 = 20,769.23 Sick leaves = (12/26) * 30,000 = 13,846.15 Total Cost on Account of Leaves = 20,769.23 + 20,769.23 + 13,846.15 = Rs. 55,384.61 (b) To calculate the total cost of leaves as percent of gross salary we should know the following: Alis Annual Gross Salary = 12 * 30,000 = Rs. 360,000 Total cost of leaves per year = Rs. 55,384.61 Using the formula: Total percentage cost of leaves = Total cost of leaves per year / Annual gross salary = 55,384.61 / 360,000 * 100 = 15.38% Hence, we got the Total percentage cost of leaves to be at 15.38%. () To calculate the leaves cost Using the formula: Leaves cost = Total percentage cost of leaves * Gross Salary = 15.38 * 30,000 = Rs. 4614

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(d) To calculate insurance/medical and other social benefits at 5% and 5.8% respectively. Insurance/Medical @ 5% = 5 * 30,000 = Rs. 1500 Other Social Benefits @ 5.8% = 5.8 * 30,000 = Rs. 1740 Total Social Charges = 1500 + 1740 + 4614 = Rs. 7854 Q#2: (a) Calculate the present value of an annuity of amount $1000 paid annually for the education purpose for 5 years at the interest rate of 9%. (b) Also calculate the future value of the annuity. Solutions (a) Using formula Present Value (PV) = C * [ (1-(1+i)^-n)/i ] C = $1000 i = 9% n=5 PV= 1000 * [ (1-(1+9%)^-5)/9% ] PV= 1000 * [(1 0.65) /0.09] PV= 1000 * [0.35/0.09] PV= 1000 * 3.89 PV= $3889.65 (b) Using formula Future Value = C * [ ((1+i)^-n)-1/i ] C = $1000 i = 9% n=5 FV= 1000 * [ ((1+9%)^5)-1/9% ] FV= 1000 * [(1.54-1) /0.09]

Mudassar Inayat FV= 1000 * [0.54/0.09] FV= 1000 * 5.98 FV= 5984.71$

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