The cost of new common stock is normally greater than any other long-term financing cost.

Question

Quizplus · Accepted Answer

This is because issuing new common stock means giving ownership of the company to new investors, who will expect to see a return on their investment. This return will come in the form of dividends, which will increase the cost of equity capital. Additionally, issuing new equity may require expensive underwriting fees, legal fees, and other costs associated with the offering process.

The Cost of New Common Stock Is Normally Greater Than