Real Rate of Return Calculator

✖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" = ((1+"NR")/(1+"IR"))-1`

Example

`"0.818182"=((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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Created by Team Softusvista

Softusvista Office (Pune), India

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Verified by Himanshi Sharma

Bhilai Institute of Technology (BIT), Raipur

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< 22 Investment Calculators

Portfolio Standard Deviation

Go Portfolio Standard Deviation = sqrt((Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient))

Portfolio Variance

Go Portfolio Variance = (Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient)

Jensen's Alpha

Go Jensen's Alpha = Annual Return on Investment-(Risk Free Interest Rate+Beta of the Portfolio*(Annual return of the market benchmark-Risk Free Interest Rate))

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)

Actuarial Method Unearned Interest Loan

Go Actuarial Method Unearned Interest Loan = (Number of Remaining Monthly Payments*Monthly Payment*Annual Percentage Rate)/(100+Annual Percentage Rate)

Equivalent Annual Annuity

Go Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)

Portfolio Expected Return

Go Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)

Total Stock Return

Go Total Stock Return = ((Ending Stock Price-Initial Stock Price)+Dividend)/Initial Stock Price

Annuity Payment

Go Annuity Payment = (Rate per Period*Present Value)/(1-(1+Rate per Period)^-Number of Periods)

Value at Risk

Go Value at Risk = -Mean of Profit and Loss+Standard Deviation of Profit and Loss*Standard Normal Variate

Profitability Index

Go Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment

Sharpe Ratio

Go Sharpe Ratio = (Expected Portfolio Return-Risk Free Rate)/Portfolio Standard Deviation

Capital Gains Yield

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

Treynor Ratio

Go Treynor's Ratio = (Expected Portfolio Return-Risk Free Rate)/Beta of the Portfolio

Average Return on Investment

Go Average Return = modulus(Total Value of Return)/Total Number of Returns

Information Ratio

Go Information Ratio = (Portfolio Return-Benchmark Return)/Tracking Error

Rate of Return

Go Rate of Return = ((Current Value-Original Value)/Original Value)*100

Straight Line Depreciation

Go Straight Line Depreciation = (Asset's Cost-Salvage)/Life

Portfolio Turnover Rate

Go Porfolio Turnover Rate = (Total Sales and Purchases of Shares/Average Net Assets)*100

Real Rate of Return

Go Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1

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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