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

Mrs. Neeta needs Rs. 5,00,000 in 3 years from now. The interest rate is 6%. By which formula can we calculate the amount which is required to be invested today to achieve the goal?

Practice question from NISM Series V A - Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    $500000 * (1+0.06)*3$

  2. $500000 / (1+0.06)^3$

    Correct answer

  3. C

    $500000 / (1+0.06)*3$

  4. D

    $500000 * (1-0.06)^3$

Why this is the answer

To calculate the present value (the amount to be invested today), use the formula: \[ \text{Present Value} = \frac{\text{Future Value}}{(1 + r)^n} \]

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