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-   -   About cost of capital (https://www.askmehelpdesk.com/showthread.php?t=247712)

  • Aug 11, 2008, 08:03 AM
    rabvai
    About cost of capital
    Why is the cost of retained earnings less than cost of common stock?
  • Aug 15, 2008, 10:28 PM
    bhet
    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.

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