Answer and Explanation:
The computation of the real rate of return on these investment alternatives is presented with the help of a spreadsheet which is attached below:-
The formula is presented below:-
Real rate of return = (1 + Nominal rate) รท (1 + Inflation rate) - 1
U.S. Government T-bills = 0.49%
Large-cap common stock = 8.64%
Long-term corporate bonds = 2.67%
Long-term government bonds = 1.46%
Small-capitalization common stock = 10.10%