Hello, please 200 words at least, thank you:
Q: What is meant by the "cost of capital", as the term pertains
to common shareholders' equity? We can easily determine the cost of
debt, which is the stated rate multiplied by one minus the marginal
tax rate; and the cost of preferred stock is usually based upon the
annual dividend plus the flotation cost per share for a new issue;
but why do we also calculate a "cost" for issuing common...