Problem:
You bought one of Great White Shark Repellant Co.'s 7.4 percent coupon bonds one year ago for $1,041. These bonds make annual payments and mature 20 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent.
Required:
Question: If the inflation rate was 4.0 percent over the past year, what was your total real return on investment?
Note: Show all workings.