Explain in words why new common stock has a higher cost than retained earnings for Mannheim.

Question

Explain in words why new common stock has a higher cost than retained earnings for Mannheim.

Expert Answer

Question:

Manhheim Biotechnology Limited is expanding the business by considering investing in some profitable projects. Stevenson, a project manager of Mannheim, was asked to estimate the cost of capital and evaluate the following projects:

Table 1. Project cash flows (in millions).

Year
0
1
2

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