Why is the cost of retained earnings the equivalent of the firms own required rate of return

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Why is the cost of retained earnings the equivalent of the firm’s own required rate of return on common stock (Ke)?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Foundations of Financial Management

ISBN: 978-1259194078

15th edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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