As a financial manager for a very profitable manufacturer of specialty steel,Kurt has been asked to investigate sources of long-term funds to finance the construction of a new facility.Kurt would prefer a funding source that does not require interest payments or involve major underwriting fees.One source that Kurt will find attractive is retained earnings.

Question

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Retained earnings are profits that have not been distributed to shareholders as dividends and can be used by a company to finance investments and growth without incurring debt or interest payments. Therefore, Kurt would prefer this funding source as it does not require interest payments or underwriting fees.

As a Financial Manager for a Very Profitable Manufacturer of Specialty