3. Darla decides to start buying stock in Walt Disney Company and Kellogg Company on a regular basis.

She is trying to decide between using a dividend reinvestment plan (DRIP) offered by the companies or purchasing the stocks through a discount broker. She asks for your help in researching the two companies’

DRIP plans online and comparing their costs in terms of fees, minimum investments, and monthly deposits. (LO 13-4)

a. If she plans to invest $500/month, should Darla go with a DRIP or a direct stock-purchase plan via a discount broker? Why?

b. If she plans to invest $100/month, should she go with a DRIP or a direct stock-purchase plan via a discount broker? Why?

c. If Darla chooses only one company’s DRIP plan, is one company a better option than the other if she plans to deposit $500/month versus $100/month?

Which one would be best, and why?