How much will the position in the stock be worth

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Reference no: EM131900699

An investor buys 100 shares of a $40 stock, that pays an annual cash dividend of $2 a share (a 5 percent dividend yield) and signs up for the dividend reinvestment plan.

a. If neither the dividend nor the price changes. how many shares will the investor have at the end of ten years? how much will the position in the stock be worth?

b. if the price of the stock rises by 6 percent annually but the dividend remains at $2 a share, how many shares are purchased each year for the nect ten years? How much is the total position worth at the end of ten years?

c. if the price of the stock rises by 6 percent annually but the dividend rises buy only 3 percent annually, how many shares are purchased each year for the next ten years? how much is the total position worth at the end of ten years? since dividends plans credit fractional shares, use three decimal places in parts (b) and (c).

Reference no: EM131900699

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