Problem:
Last year, you purchased a stock at a price of $51.50 a share. Over the course of the year, you received $1.80 per share in dividends and the annual inflation rate averaged 2.6 percent. Today, you sold your shares for $53.60 a share.
Required:
Question: What is your approximate annual real rate of return on this investment?
Note: Provide support for your underlying principle.