rabvai
Aug 11, 2008, 08:03 AM
Why is the cost of retained earnings less than cost of common stock?
bhet
Aug 15, 2008, 10:28 PM
Cost of Common Stock is higher due to floatation cost and other incidental cost in issuing new shares of common Stock. Retained earnings is lower because retained earnings is for internal financing porpuses and it disregards the other cost such as floatation cost and the like.