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Which of the following statements about the cost of capital is most correct? ...

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Finance

Which of the following statements about the cost of capital is most correct?

A Equity generated by retained earnings is costless.
B For-profit firms should always retain the full amount of net income and reinvest it in the business.
C For-profit firms should always distribute the full amount of net income as dividends.
D For-profit firms should distribute net income through dividends if they cannot earn as much as stockholders could in similar risk investments.
E None of the statements above is correct.

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