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Real Rate of Return Calculator

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✖Nominal Rate refers to the interest rate before taking inflation into account.ⓘ Nominal Rate [NR]			+10% -10%
✖Inflation Rate is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.ⓘ Inflation Rate [IR]			+10% -10%

✖Real Rate of Return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects.ⓘ Real Rate of Return [Real RR]

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Formula

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Real Rate of Return

Formula

Real RR = (\frac{1 + NR}{1 + IR}) - 1

Example

0.818182 = (\frac{1 + 19}{1 + 10}) - 1

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Real Rate of Return Solution

STEP 0: Pre-Calculation Summary

Formula Used

Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1
Real RR = ((1+NR)/(1+IR))-1
This formula uses 3 Variables

Variables Used

Real Rate of Return - Real Rate of Return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects.
Nominal Rate - Nominal Rate refers to the interest rate before taking inflation into account.
Inflation Rate - Inflation Rate is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

STEP 1: Convert Input(s) to Base Unit

Nominal Rate: 19 --> No Conversion Required
Inflation Rate: 10 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

Real RR = ((1+NR)/(1+IR))-1 --> ((1+19)/(1+10))-1

Evaluating ... ...

Real RR = 0.818181818181818

STEP 3: Convert Result to Output's Unit

0.818181818181818 --> No Conversion Required

FINAL ANSWER

0.818181818181818 ≈ 0.818182 <-- Real Rate of Return

(Calculation completed in 00.004 seconds)

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< Important Formulas of Investment Calculators

Compound Interest

Go Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)

Certificate of Deposit

Go Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)

Capital Gains Yield

Go Capital Gains Yield = (Current Stock Price-Initial Stock Price)/Initial Stock Price

Risk Premium

Go Risk Premium = Return on Investment (ROI)-Risk Free Return

Real Rate of Return Formula

Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1
Real RR = ((1+NR)/(1+IR))-1

How to Calculate Real Rate of Return?

Real Rate of Return calculator uses Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1 to calculate the Real Rate of Return, Real Rate of Return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. Real Rate of Return is denoted by Real RR symbol.

How to calculate Real Rate of Return using this online calculator? To use this online calculator for Real Rate of Return, enter Nominal Rate (NR) & Inflation Rate (IR) and hit the calculate button. Here is how the Real Rate of Return calculation can be explained with given input values -> 0.818182 = ((1+19)/(1+10))-1.

FAQ

What is Real Rate of Return?

Real Rate of Return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects and is represented as Real RR = ((1+NR)/(1+IR))-1 or Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1. Nominal Rate refers to the interest rate before taking inflation into account & Inflation Rate is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

How to calculate Real Rate of Return?

Real Rate of Return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects is calculated using Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1. To calculate Real Rate of Return, you need Nominal Rate (NR) & Inflation Rate (IR). With our tool, you need to enter the respective value for Nominal Rate & Inflation Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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