cost of retained nearnings.

CFA Level I
#1

Is cost of equity same as cost of retained earnings? Refer to question # 25, Reading 37 Cost of capital page 87 VOL 4

#2

As I know in short:

  1. Cost of Retained Earnings is the Internal Cost of Equity.

It means when you don’t have to fund for new investments from issuing new common stock to external

  1. When the investment exceeds your RE, you have to issue new common stock to investors.

This time, you have to you External Cost of Equity for calculation

#3

As I know in short:

  1. Cost of Retained Earnings is the Internal Cost of Equity.

It means when you don’t have to fund for new investments from issuing new common stock to external

  1. When the investment exceeds your RE, you have to issue new common stock to investors.

This time, you have to you External Cost of Equity for calculation