The formula to calculate the Reinvestment Rate is:
\[ RIR = \left( \frac{RA}{IA} \right) \times 100 \]
Where:
The reinvestment rate is a measure of the percentage of earnings or returns that are reinvested back into the investment, rather than being withdrawn. It is a key metric for understanding the growth potential of an investment, as reinvested earnings can generate additional returns over time.
Let's assume the following values:
Using the formula:
\[ RIR = \left( \frac{5000}{25000} \right) \times 100 = 20\% \]
The Reinvestment Rate is 20%.
Let's assume the following values:
Using the formula:
\[ RIR = \left( \frac{10000}{50000} \right) \times 100 = 20\% \]
The Reinvestment Rate is 20%.