The Cost of Equity Raised by Retaining Earnings Can Be

question 15

True/False

The cost of equity raised by retaining earnings can be less than,equal to,or greater than the cost of equity raised by selling new issues of common stock,depending on tax rates,flotation costs,the attitude of investors,and other factors.

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Definitions:

Kilowatt Hours

A unit of energy equivalent to one kilowatt of power expended for one hour, commonly used to measure electricity consumption.

Hourly Fee

A billing method where a service provider charges based on the number of hours worked.

Flat Fee

A charged price for a service that does not vary with usage or time.

Overhead

All manufacturing costs that cannot be directly traced to a product. Overhead includes indirect labor and materials, plant depreciation, insurance and property taxes, plant management salaries, and so forth. See Indirect Cost Pool.