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Satya
Note the formula: r=(I-e)/(1+e), where, r=real return, I=nominal return from annuity, e= rate of inflation.
Now, r = (7.5%-4%)/(1+4%)= 3.5%/1.04 = 3.3654%.
Please get back for clarifications.
Apr 24 2013 12:25 AM
Now, r = (7.5%-4%)/(1+4%)= 3.5%/1.04 = 3.3654%.
Please get back for clarifications.