In General, It Is Not Possible for Re, the Cost

question 76

True/False

In general, it is not possible for re, the cost of new equity, to be lower than rs, the cost of retained earnings.
However, an exception to this rule occurs when the stock price increases just prior to the firm issuing new equity such that it more than offsets the flotation costs and thus, re becomes less than rs.

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Definitions:

Epoxy Composites

Materials made by reinforcing epoxy resin with fibrous materials, known for their high strength, durability, and resistance to chemicals and heat.

Titanium Graphite

A composite material that combines titanium and graphite, known for its high strength and lightweight properties.