Number Cruncher #1 - p. 429

1. In preparing this case refer to Table 15-1 on p. 408 to help with your calculations. Use the column headings to prepare a table for your calculations.

2. When preparing your table, add a column for 5% Increase. (Between Dividend Earned and Buy This Many New Shares)

3. Now show how much the stock will be worth if you spend the dividends as you receive them and do not reinvest them. Show all calculations.

1. You buy 100 shares of XYZ at $40 per share. XYZ pays an annual dividend of $2 and offers an automatic dividend reinvestment plan. Assume that the dividend will remain constant over the next five years and that the stock will increase by 5 percent each year. How much will your XYZ investment be worth after five years if you partake of the dividend rein- vestment plan? How much will your XYZ investment be worth after five years if you spend all the dividends as you receive them