Emil has an investment that earns 14% return on investment. If inflation is 3%, what is Emil's real rate of return?

Name: Emil has an investment that earns 14% return on investment. If inflation is 3%, what is Emil's real rate of return?
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Question

Quizplus · Accepted Answer

The real rate of return can be calculated using the formula: $\text{Real Rate of Return} = \frac{1 + \text{Nominal Rate}}{1 + \text{Inflation Rate}} - 1$. Plugging in the given values: $\frac{1 + 0.14}{1 + 0.03} - 1 = 0.106796$ or approximately 10.68%.

Emil Has an Investment That Earns 14% Return on Investment