Log in

View Full Version : Investment appraisal methods and calcualation of nominal rate of return


saleemf
Sep 10, 2009, 04:21 AM
Calculate the nominal rate of return by using real rate of return and the expected inflation rate of 2.2% and tell me how to use the investment appraisal methods after doing this?
Thanks for help.

ArcSine
Sep 10, 2009, 04:36 AM
With the one-period real return r, the inflation rate i, and the nominal return n all expressed as decimals, the following equality holds...

(1 + n) = (1 + r)(1 + i)

Given any two of the three you can quickly find the third.

As to the second part of your question, explain that a bit more, and tell me your thoughts on it.