If he were that kind of hands-on manager, this mess might not have happened in the first place.
The real risk-free rate is 4%. 1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero.
The MARR is often decomposed into the sum of the following components (range of typical values shown): 1  Traditional inflation-free rate of interest for risk-free loans: 3-5%. 2  Expected rate of inflation: 5%. 3  The anticipated change in the rate of inflation, if any, over the life of the investment: Usually taken at 0%.