n NISM Certifications
V-A NISM Series V-A
Medium

Mohit is currently studying but wants to start a business after 5 years. The present cost of starting such a business is Rs. 10 lakhs. The inflation in the economy is 9%. Which formula should be used to calculate the amount Mohit will need 5 years down the line?

Practice question from NISM Series V A - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. $10,000,00 * (1+0.09)^5$

    Correct answer

  2. B

    $10,000,00 / (1+0.09)^5$

  3. C

    $10,000,00 * (1+0.09)5$

  4. D

    $10,000,00 * (10.09)^5$

Why this is the answer

To calculate the future value (FV) after accounting for inflation, the formula used is: \[ \text{FV} = \text{PV} \times (1 + r)^n \]

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