Explain Why When Calculating the Weighted Average Cost of Capital

question 6

Essay

Explain why when calculating the weighted average cost of capital for a firm, retained earnings is never included in the calculations?

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Definitions:

Input Prices

The cost of resources used in the production of goods or services, including raw materials, labor, and overheads.

Technological Change

Refers to the improvement or innovation in technology, affecting how goods or services are produced or delivered.

Number Of Suppliers

The total count of entities or individuals providing a specific good or service in a market.

Normal Good

A good for which demand increases as the income of the individual or economy increases, and decreases when the income decreases.