Equity generated by retained earnings is costless

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Which of the following statements about the cost of capital is most correct? Equity generated by retained earnings is costless. For-profit firms should always retain the full amount of net income and reinvest it in the business. For-profit firms should always distribute the full amount of net income as dividends. For-profit firms should distribute net income through dividends if they cannot earn as much as stockholders could in similar risk investments. None of the statements above is correct.

Reference no: EM131595245

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