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The reinvestment of capital gains and dividends can make a significant difference in your total return. Consider the following situation,, to determine the difference reinvestment can make over a 5-year period. Assume all distributions are made on the last day of the year at the closing net asset value (NAV). Ignore tax consequences for the scenarios in a and b, below. a. Calculate the ending investment value plus the total of distributions received assuming no reinvestment. b. Calculate the ending investment value assuming all distributions are reinvested. c. Calculate and explain the difference. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Initial purchase amount Initial purchase date $9,000.00 January 1 Initial purchase price $25.76 per share Annual capital gains distribution rate 1.82% Annual dividend distribution rate Annual price appreciation rate 0.91% 6.89% (before distribution) ✗

The reinvestment of capital gains and dividends can make a significant difference in your total return. Consider the following situation,, to determine the difference reinvestment can make over a 5-year period. Assume all distributions are made on the last day of the year at the closing net asset value (NAV). Ignore tax consequences for the scenarios in a and b, below. a. Calculate the ending investment value plus the total of distributions received assuming no reinvestment. b. Calculate the ending investment value assuming all distributions are reinvested. c. Calculate and explain the difference. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Initial purchase amount Initial purchase date $9,000.00 January 1 Initial purchase price $25.76 per share Annual capital gains distribution rate 1.82% Annual dividend distribution rate Annual price appreciation rate 0.91% 6.89% (before distribution) ✗

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The reinvestment of capital gains and dividends can make a significant difference in your total return. Consider the following situation,, to determine the difference reinvestment can make over a 5-year period. Assume all distributions are made on the last day of the year at the closing net asset value (NAV). Ignore tax consequences for the scenarios in a and b, below. a. Calculate the ending investment value plus the total of distributions received assuming no reinvestment. b. Calculate the ending investment value assuming all distributions are reinvested. c. Calculate and explain the difference. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Initial purchase amount Initial purchase date $9,000.00 January 1 Initial purchase price $25.76 per share Annual capital gains distribution rate 1.82% Annual dividend distribution rate Annual price appreciation rate 0.91% 6.89% (before distribution) ✗
Transcribed Image Text:The reinvestment of capital gains and dividends can make a significant difference in your total return. Consider the following situation,, to determine the difference reinvestment can make over a 5-year period. Assume all distributions are made on the last day of the year at the closing net asset value (NAV). Ignore tax consequences for the scenarios in a and b, below. a. Calculate the ending investment value plus the total of distributions received assuming no reinvestment. b. Calculate the ending investment value assuming all distributions are reinvested. c. Calculate and explain the difference. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Initial purchase amount Initial purchase date $9,000.00 January 1 Initial purchase price $25.76 per share Annual capital gains distribution rate 1.82% Annual dividend distribution rate Annual price appreciation rate 0.91% 6.89% (before distribution) ✗
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