Since Retained Earnings Is a More Expensive Source of Financing

question 100

True/False

Since retained earnings is a more expensive source of financing than debt and preferred stock, the weighted average cost of capital will fall once retained earnings have been exhausted.

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Definitions:

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Major Classes

Categories or groups into which business assets, liabilities, equity, income, and expenses are divided for organizational and reporting purposes.

20-Year Period

Denotes a time frame of twenty years, often used in the context of loans, investments, or planning horizons.

Book Value

The net value of a company's assets minus its liabilities, often in relation to an individual asset or the company as a whole.