Answer:
the real rate of return is 2.78%
Explanation:
The computation of the real rate of return is shown below:
The real rate of return is
(1 + nominal rate of return) = (1 + real rate of return) × (1 + inflation rate of return)
Real rate of return = (1 + nominal rate of return) ÷ (1 + inflation rate of return) - 1
= (1 + 0.0575) ÷ (1 + 0.0289) - 1
= 0.027796676
= 2.78%
hence, the real rate of return is 2.78%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
