why is retained earnings not the cheapest source of finance ?

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Solution

Keerat, retained earnings is considered to be the cheapest source of finance. This is because the company does not incur any external cost in the form of interest or dividend payments to use this source of finance.

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Similar questions

The cheapest source of finance is

(a) debenture

(b) equity share capital

(d) retained earning

Discuss the merits and demerits of retained earnings as a source of business finance.

"As a source of finance retained earnings is better than other sources". Do you agree ? Give reasons for your answer.

Retained earnings are called self-financing.

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