Cost of retained earnings includes dividends paid to shareholders and the flotation costs charged by underwriting firms.

Question

Quizplus · Accepted Answer

Cost of retained earnings refers to the opportunity cost for a company using its internal funds for investment rather than distributing them to shareholders as dividends. It does not include dividends already paid or flotation costs, which are associated with issuing new shares.

Cost of Retained Earnings Includes Dividends Paid to Shareholders and the Flotation