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):

1 + n

1 + i

=

(1 + i)(1 + r)

1 + i

Solve for r

1 + r =

1 + n

1 + i

1 + r =

1 + 0.048

1 + 0.01

1 + r =

1.048

1.01

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

Real Rate of Interest = 3.76%

What is the Answer?

Real Rate of Interest = 3.76%

How does the Inflation and Real Rate of Interest Calculator work?

Free Inflation and Real Rate of Interest Calculator - Calculates Real rate of Interest, Inflation, and nominal interest rate before inflation. This calculator has 3 inputs.

What 1 formula is used for the Inflation and Real Rate of Interest Calculator?