<-- Real %
Given a nominal interest rate of 4.8%
and an inflation rate of 1% Calculate the real interest rate: Show relation of (n), (i), and (r)1 + n = (1 + i)(1 + r) Divide each side by (1 + i):
Solve for r
| 1 + r = | 1 + 0.048 | | | 1 + 0.01 |
1 + r = 1.0376237623762 r = 1.0376237623762 - 1 r = 0.03762 Convert Real Rate to a %Real Percent = 0.03762 * 100% Real Percent = 3.762 Final Answer
Real Rate of Interest = 3.76%
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