cost of retained earnings equity

how to calcualte it ? are they the same as retained earnings? for cost of retained earnings equity, do we use it to calcualte WACC? Thanks.

its the cost of common stock without the floatation costs.

yes it is used in WACC. in order of the cheapness (lowest relative cost) WACC = Kdebt (tax shield) + Kpreferred stock + Kretained earnings + Kcommon stock

In exam 2 they hqave considered cost of retained earnings as the cost of equity

when calcualate marginal cost of capital: is it WACC=Weight of debt*Kdebt(tax shield) + Weight of preferred *kpreferred stock+Kretained earnings*Weight of common stock? if not ask for calculate of mariginal cost of capital, then use weight of common stock * Kcommon stock? Thanks. bmwhype Wrote: ------------------------------------------------------- > yes it is used in WACC. > in order of the cheapness (lowest relative cost) > WACC = Kdebt (tax shield) + Kpreferred stock + > Kretained earnings + Kcommon stock