Funds acquired by the firm through retaining earnings have no cost because there are no dividend or interest payments associated with them, and no flotation costs are required to raise them, but capital raised by selling new stock or bonds does have a cost.
True / False.

This statement is false because all funds acquired through earnings have an intrinsic cost that must be determined at the time of withholding them, which must be taken into account during the sale process of any title that is part of the estate. business.

Answer Link

anthougo anthougo · Answer 2 · 2021-11-11T16:43:20+01:00

The statement that retained earnings do not cost the firm like equity or debt capital is FALSE.

The cost of retained earnings is, indeed, less than the cost of equity, but retained earnings do not have zero cost.

Generally, retained earnings represent the portion of net income not paid out to stockholders as dividends. Retained earnings as an internal means companies generate funds have an opportunity cost, the unpaid dividends, which may be equivalent to the cost of raising debts.

Thus, the cost of retained earnings is equivalent to the cost of equity without flotation costs.

Learn more: https://brainly.com/question/17071058

Funds acquired by the firm through retaining earnings have no cost because there are no dividend or interest payments associated with them, and no flotation costs are required to raise them, but capital raised by selling new stock or bonds does have a cost. True / False.

Respuesta :

Otras preguntas

Funds acquired by the firm through retaining earnings have no cost because there are no dividend or interest payments associated with them, and no flotation costs are required to raise them, but capital raised by selling new stock or bonds does have a cost.
True / False.