Inflation and Real Rate of Interest Calculator

<-- 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):

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

Final Answer

Real Rate of Interest = 3.76%

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