Q438
Cost of equity which is raised by reinvesting earnings internally must be higher than the
A.
cost of initial offering
B.
cost of new common equity
AnswerC.
cost of preferred equity
D.
cost of floatation
Answer: Option B
Solution
Answer: Option B
Solution:
Cost of equity which is raised by reinvesting earnings internally must be higher than the cost of new common equity. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.