## Real Rate Of Return

The real rate of return formula is the sum of one plus the nominal rate divided by the sum of one plus the inflation rate which then is subtracted by one. The formula for the real rate of return can be used to determine the effective return on an investment after adjusting for inflation. The nominal rate is the stated rate or normal return that is not adjusted for inflation.

## $$\frac{1+n}{1+i}-1$$

Here,n=nominal rate,i=inflation rate.

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