Real Rate of Return Calculator is a tool that helps an investor to find out what actually he gets in return for investing a specific sum of money in an investment
- Real Rate Of Return:
- What does Real Rate of Return mean?
- The real rate of return is the annual percentage return realized on the investment that is adjusted for changes in prices due to inflation or other external effects.
- Real Rate of Return = (1 + Nominal Rate) / (1 + Inflation Rate) – 1
Ms Sean has kept $100,000 in a bank. The bank promises to pay 6% rate of return by the end of the year. The inflation rate is 3% during the particular year.
According, to the formula, Real Rate of Return is:-
- = (1 + 0.06) / (1 + 0.03) – 1
- = 1.06 / 1.03 – 1
- = 0.0291 = 2.91%
- Jun 10, 2018
- Tool Launched