Examveda
Examveda

Cost of retained earnings is equal to _______.

A. Cost of equity

B. Cost of debt

C. Cost of bank loan

D. Cost of term loans

Answer: Option A

Solution(By Examveda Team)

Cost of retained earnings is equal to Cost of equity. The cost of retained earnings is the earnings foregone by the shareholders. In other words, the opportunity cost of retained earnings may be taken as the cost of retained earnings.

This Question Belongs to Commerce >> Financial Management

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Comments ( 2 )

  1. Seema Dhochak
    Seema Dhochak :
    2 years ago

    Cost of retained earning is lesser than equity because of tax and brokerage adjustments.

  2. Sanesh K
    Sanesh K :
    4 years ago

    cost of retained earnings is lesser than cost of equity
    ie Kr = Ke(1-t)(1-b)

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