Two sources of capital of common equity are the issuance of new common stock (external) and retained earnings (internal). Compare the cost of the two sources of capital and state which method you would use and why.

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 16MCQ
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Two sources of capital of common equity are the issuance of new common stock (external) and retained earnings (internal).

Compare the cost of the two sources of capital and state which method you would use and why.

How does the issuance of a dividend compare to using retained earnings as a source of capital? 

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