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Cost of retained earnings
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Cost of Capital
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shraddha, India

Cost of retained earnings

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.
 
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bhavik, India
 

Reply to Question Regarding Retained Earnings

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
Suggestions welcomed...

 

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More on Cost of Capital:
Summary
Discussion Topics
topic What are the Effects of Inflation for Companies?
topic Analysis of Capital Investments
👀Cost of retained earnings
topic Cost of Capital ( Equity Only)
🔥 What is the Difference Between Cost of Capital and Weighted Average Cost of Capital?
Special Interest Group

SIG Leader

Do you know a lot about Cost of Capital? Become our SIG Leader
Knowledge Center

Cost of Capital
Knowledge Center


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