Answer:
6.875%
Explanation:
In order to compute the real return, first, we have to determine the after-tax return which is shown below:
After-tax return = Pre-tax return - tax rate of Pre-tax return
= 14.5% - 25% × 14.5%
= 14.5% - 3.625%
= 10.875%
And, the inflation rate is 4%
So, the real return would be
= 10.875% - 4%
= 6.875%
