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Cost of retained earnings is equal to

This question belongs to Commerce Financial Management
Financial Management
?

Cost of retained earnings is equal to _______.

Answer & Solution
Correct Answer: Option A
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.
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2 Comments
Seema Dhochak
Seema Dhochak 4 years ago
Cost of retained earning is lesser than equity because of tax and brokerage adjustments.
Sanesh K
Sanesh K 7 years ago
cost of retained earnings is lesser than cost of equity
ie Kr = Ke(1-t)(1-b)
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