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10. In general, the least expensive source of capital is Select one: a. debt. b. new...

10. In general, the least expensive source of capital is Select one:

a. debt.

b. new common stock.

c. preferred stock

d. retained earnings.

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Answer #1

Answer. (d) retained earnings

Explanation: Retained earning are nothing but simply the profits of the company which have been saved and not spent for owners or shareholders. Using retained earnings has several benefits such as no interest rates on borrowing, no specific loan regulations to follow, no collateral to arrange for, etc. Thus a company can easily reinvest its retained earnings as capital for various purposes like expansion, diversification, advertisements, repairs, etc. at the cheapest cost.

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