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.

Join The Discussion

Comments ( 1 )

  1. Sanesh K
    Sanesh K :
    2 years ago

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

Related Questions on Financial Management

Investment is the _______________.

A. net additions made to the nation’s capital stocks

B. person’s commitment to buy a flat or house

C. employment of funds on assets to earn returns

D. employment of funds on goods and services that are used in production process