Question
An investor buys 500 shares of stock at $50 and the stock pays a 4% annual dividend. If the investor holds the stock for 10
An investor buys 500 shares of stock at $50 and the stock pays a 4% annual dividend.
If the investor holds the stock for 10 years and the neither the price nor the dividend change and the investor chooses to reinvest the dividends into stock what will be the value of the stock holdings and how many shares will the investor have?
If the investor holds the stock for 10 year and the stock price increases by 5% per year and the dividend remains the same, what will be the value of the holdings if the investor reinvests the dividends in additional stock holdings and how many shares of stock will the investor have?
If the investor holds the stock for 10 year and the stock price increases by 5% per year and the dividend remains the same, what will be the value of the holdings if the investor does not reinvest the dividends how many shares of stock will the investor have and how much will they be worth?
What is the difference between a, b, c and how significant are the additions from reinvesting?
Please include a properly setup Excel spreadsheet that has a tab labeled Q1..Q5 for each problem. Also, use cell referencing. Thanks!
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