Define: Reinvestment Rate

UK Accounting Glossary

Definition: Reinvestment Rate

Quick Summary of Reinvestment Rate

The reinvestment rate is the amount of interest that can be earned when money is taken out of one fixed-income investment and put into another.

What is the dictionary definition of Reinvestment Rate?

Dictionary Definition

Pertaining to the interest rate at which an investor is able to reinvest income earned on an existing investment.

Full Definition of Reinvestment Rate

Examples of Reinvestment Rate in a sentence

For the purpose of calculating the Reinvestment Rate, the most recent statistical release shall be used.

Reinvestment Rate FAQ's

How do you calculate reinvestment rate?

Divide the company’s capital expenditures by the net income to determine the reinvestment rate.

For example, if a company has $100,000 in net income and $50,000 in capital expenditures, the reinvestment rate is equal to $50,000/$100,000 = 50%.

What is reinvestment rate risk?

Reinvestment risk is the risk that future cash flows – either coupons (the periodic interest payments on the bond) or the final return of principal – will need to be reinvested in lower-yielding securities.

What is reinvestment rate risk?

This means that in the calculation, any cash flow – such as earnings, interest, rents or dividends- are reinvested at the assumed rate.

The rate assumption for reinvestment can have a significant effect on the projected results for an investment or project.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Reinvestment Rate. Payroll & Accounting Heaven Ltd. July 20, 2019
Chicago Manual of Style (CMS):
Reinvestment Rate. Payroll & Accounting Heaven Ltd. (accessed: July 20, 2019).
American Psychological Association (APA):
Reinvestment Rate. Retrieved July 20, 2019, from website:

Definition Sources

Definitions for Reinvestment Rate are sourced/syndicated from:

  • Oxford Dictionary Of Economics
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th May 2019.