Cost of retained earnings

			
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				              Cost of retained earnings

			                shraddha

My question is how to calculate cost of capital in case a company has its funds only through equity shares & its reserves?
Then how to calculate cost of retained earnings (reserves). As it is a major constituent of company's long term funds. (...) Read more? Sign up for free
			            
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			                  		Reply to Question Regarding Retained Earnings
														
														bhavik

The retained earnings can be calculated as follows:

K'E(i.e. Cost of retained earnings) = KE * (1 - F)

Where KE = Cost of Equity, F = Flotation cost

In case flotation cost is not given you may take KE = K'E

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