Explain how a dividend reinvestment plan is similar to compounding and the time value of money
What will be an ideal response?
Answer: With compounding, the interest you earned from previous periods earns interest in the current period. As time progresses, the interest earning interest becomes a substantial part of your future value. By reinvesting all dividend and capital gains distributions into additional shares of the fund, you are basically compounding these new shares which will earn more distributions, additional new shares, and this reinvesting will make up a substantial portion of the future value of your total investment.
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Refer to Camey Construction. How much should Camey recognize as Accounts Receivable at the end of Year 1 assuming the use of the percentage-of-completion method?
A) $500,000 B) $1,000,000 C) $1,500,000 D) $2,000,000
The statement of cash flows has classifications of
A) operating, investing, and debt activities. B) investing, operating, and expense activities. C) operating, investing, and equity activities. D) operating, financing, and equity activities. E) operating, investing, and financing activities.