investment real return with inflation rate

label Business
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

inflation rate: 3%

investment return: 7%

real return: ??
Apr 5th, 2015

The shortcut formula is: Nominal Return - Inflation Rate = Real Rate of Return

In this case the answer would be: 7% - 3% = 4%

The more precise formula is: (1 + nominal rate)/(1 + inflation rate) - 1 = Real Rate of Return

In this case the precise answer would be (1+ 0.07)/(1 + 0.03) - 1 = 3.88%

Apr 5th, 2015

Studypool's Notebank makes it easy to buy and sell old notes, study guides, reviews, etc.
Click to visit
The Notebank
...
Apr 5th, 2015
...
Apr 5th, 2015
Oct 24th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer