An investment grew in value from $5,630 to $8,485 during a five-year period. The annual rate of inflation for the 5 years was 2.3%. What was the compound annual real rate of return during the five years?

Compound Annual Real Rate of Return

The rate of return on an investment, adjusted for inflation, that compounds annually, reflecting the true purchasing power of earnings.

Annual Rate of Inflation

The percentage increase in the price of goods and services over a one-year period, indicating the rate at which the purchasing power of money is eroded.