When to use simple summation (Inflation + After/before tax return) to get the nominol return and when to mutliply p[(1+Inflation) * (1+ After/before tax return)] it. I’ve seen different methods being used in questions. Also, for core capital calculation, we divide the total growth by 1+i to calculate the real growth %, instead of just subtracting it?
anyone, please can you help in explaining. thanks
can anyone please help in exolaining.
generally we use: Nominal before tax = [real / (1-t)] + inflation
sometime we use: Nominal before tax = (real + inflation) / (1-t)
It depends if the whole account is taxable or not.