Rhonda and Reggie Hotspur Are Working Hard to Save for Their

question 81

Essay

Rhonda and Reggie Hotspur are working hard to save for their children's college educations. They don't need more cash for current consumption but will face big tuition bills in 2020. Should they therefore avoid investing in stocks that pay generous current cash dividends? Explain briefly.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, particularly in terms of liquid assets.

Investing Activities

Transactions involving the acquisition or disposal of long-term assets and other investments not considered as cash equivalents.

Expected Income

The amount of money an individual or business anticipates receiving over a specific period, based on projections or past performance.

Future Transactions

Financial activities or dealings that are expected to occur in the future.