The cost of equity from selling new stock is greater than the cost of retained earnings because:

A) selling new stock decreases the earnings per share.
B) selling new stock increases the market price of the stock.
C) of the flotation costs.
D) dividends are increased.

Flotation Costs

The administrative cost of issuing new securities. Consists largely of commissions and marketing fees, but printing and engraving costs can also be significant.

Retained Earnings

The portion of a company's profits that is kept or retained rather than paid out as dividends to shareholders.