RatedrillReal return after inflation
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
Your investments earned 4.25% last year while inflation was 2%. What was your exact real rate of return?
What this problem teaches
The shortcut 4.25% - 2% = 2.25% slightly overstates it.
A hint if you get stuck
Exact real return = (1 + nominal) / (1 + inflation) - 1.
This problem is part of Pro
Pro unlocks all 53 problems, with worked solutions and progress saved to your account. The free problems work without an account.
You create a free account first, so Pro is attached to it.
Monthly is charged today and then every month until you cancel, in one click from your account page. Lifetime is one payment with no renewals. Full refund within 14 days of paying.