# Real Rate Calculator

Instructions: Use this Real Rate Calculator to compute the real rate with this calculator, by indicating the nominal rate paid ($$R$$), as well as the inflation rate ($$h$$): Nominal Rate $$(R)$$ = Inflation Rate $$(h)$$ =

## Real Rate Calculation

More about this Real Rate calculator so you can better understand the results provided by this solver: The real rate it is typically the rate required by investors, that takes into account the nominal rate of the investment $$R$$, but it also considers the effect of inflation. The following formula is used to compute the real rate of return:

$r = \displaystyle \frac{1+R}{1+h} -1$

Observe that the expression above gives a link between growth rate and inflation, or more specifically, it shows how the inflation affects the nominal growth rate. The above formula can be seen also as an inflation rate formula if we solved for the inflation rate $$h$$.

You can instead compute the nominal rate from the real rate. An associated concept is the idea of rate of return on equity, for which can use this calculator.

In terms of interest rate, you may also be interested in the idea of effective annual rate (or EAR).

Another calculator you may want to be interested in using is the Mortgage Payment Calculator.

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