Why is the cost of external equity capital more expensive than the cost of internal equity?

The cost of external equity is not more expensive than the cost of internal equity; they both have the same cost.

Because the capital asset pricing model is used to estimate the cost of internal and the dividend valuation model is used to estimate cost of external.

Because internal equity is free, it has no cost since there is no need to attract investors to raise internal equity.

Because the cost of external equity must take into account the issuance costs, the cost of internal equity does not.