Equity can be raised in two ways by retaining some of the


Equity can be raised in two ways; by retaining some of the current year's earnings and by issuing common stock. Please explain

a. Why is there a cost of retained earnings?

b. Why the cost of retained earnings is cheaper than the cost of issuing new common stock.

 

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Finance Basics: Equity can be raised in two ways by retaining some of the
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