banner image

Opt In (Do Not Edit Here)

banner image

Cost of Retained Earnings

Cost of Retained Earnings:

Retained earnings is one of the sources of finance for investment proposal; it is different from other sources like debt, equity and preference shares. Cost of retained earnings is the same as the cost of an equivalent fully subscripted issue of additional shares, which is measured by the cost of equity capital. Cost of retained earnings can be calculated with the help of the following formula:

Ke = Kt (1–t) (1–b)

[Post Image Courtesy of JK1991 at]


Kr = Cost of retained earnings

Ke = Cost of equity

t = Tax rate

b = Brokerage cost

Cost of Retained Earnings Cost of Retained Earnings Reviewed by Blog Editor on Saturday, May 06, 2017 Rating: 5

No comments:

Do you have any reasonable comments for this post ? Please feel free to drop them below using the comment box. We will moderate and publish them as soon as possible. Cheers !

Powered by Blogger.