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What is the annual amount that mohit can spend

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Question - Mohit Sharma owns a sports complex in R.K. Puram, New Delhi. He charges his customers an annual fee of Rs. 500 and has an existing customer base of 600. Mohit is planning to increase the annual fee by 6 percent every year and expects the club membership to grow at a constant rate of 3 percent for the next 5 years. The overall expenses of running a sports complex are Rs. 125,000 a year and are expected to grow at the inflation rate of 2 percent annually. After 5 years, Mohit plans to buy a boat for Rs. 500,000, close the health club and travel the world in his boat for the rest of his life. What is the annual amount that Mohit can spend while on his world tour if he will have no money left in the bank when he dies? Assume Mohit has a remaining life of 25 years and earns 9 percent on his savings.

Reference no: EM132950299

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