Consider the Discussions Concerning the Cost of Ordinary Equity

Consider the discussions concerning the cost of ordinary equity.What is the relationship between the cost of retained earnings (internal equity) , rs, and the cost of new ordinary equity (external equity) , re?

A) rs > re, because new shareholders are willing to accept a lower return and "pay their dues" before they start receiving the higher returns that existing, loyal shareholders receive.
B) 0 = rs < re, because there is no "real" cost to the income that the firm decides to retain to reinvest in assets rather than payout to ordinary shareholders as dividends.
C) 0 < rs < re, because there is a real cost to retaining income (earnings) for reinvestment, but the firm has to pay flotation costs when issuing new ordinary shares.
D) rs = re, because they both represent essentially the same source of funds, so they must have the same cost.
E) None of the above is a correct answer.