Question

3. Some people regard retained earnings as a source of capital without any cost. Do you agree with
this view?
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Answer 1

Answer:-

No Explicit Cost:

• Compared to other sources of finance even equity shares or debt, company have to pay some cost as interest or dividend. There is a cost attached to it, company have to bear but in retained earnings we don't have to pay anything to anybody because it is company's own money.