NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products
Caselet: Ms. Nair, aged 40, will retire at 60 and plans a corpus of Rs 2,00,00,000. She will invest a lump sum today in an NPS-like product expected to earn 10% p.a. compounded annually. Using (1.10)^20 = 6.7275, approximately what lump sum must she invest today to reach the target?
She needs about Rs 29,73,000 today. Discounting the Rs 2 crore target over 20 years at 10% means dividing by 6.7275, which gives roughly Rs 29.73 lakh, and growing that amount at 10% returns Rs 2 crore.
- ARs 29,73,000Correct
- BRs 20,00,000
- CRs 1,34,55,000
- DRs 10,00,00,000
Explanation
Present value = 2,00,00,000 / 6.7275 = about Rs 29,72,870, roughly Rs 29,73,000. Check: 29,73,000 x 6.7275 is about 2.0 crore. Rs 1.3455 crore multiplies instead of dividing, Rs 20 lakh ignores growth by using simple division by 10, and Rs 10 crore is unrelated.
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