The cost of equity obtained by retaining earnings is generally regarded as being the rate of return stockholders require on the firm's common stock.

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The cost of equity obtained by retaining earnings is also known as the Cost of Retained Earnings or the Discount Rate of Retained Earnings. It is the minimum rate of return that a company must earn on the investments that it retains in the business to keep its shareholders happy. Therefore, it is generally regarded as the rate of return stockholders require on the firm's common stock.

The Cost of Equity Obtained by Retaining Earnings Is Generally