{"id":493,"date":"2014-06-19T16:12:13","date_gmt":"2014-06-19T16:12:13","guid":{"rendered":"http:\/\/zh.aceessays.com\/tc\/?p=493"},"modified":"2015-01-18T20:41:03","modified_gmt":"2015-01-18T20:41:03","slug":"retained-earnings","status":"publish","type":"post","link":"https:\/\/www.aceessays.com\/tc\/retained-earnings\/","title":{"rendered":"Retained earnings"},"content":{"rendered":"<h3>Retained earnings<\/h3>\n<ul>\n<li>Retained earnings have an opportunity cost, which is equal to the cost of equity.<\/li>\n<\/ul>\n<ul>\n<li>The cost of retained earnings can thus be found in the same way as the cost of equity.<\/li>\n<\/ul>\n<ul>\n<li>It is a mistake to see retained earnings as a free source of finance.<\/li>\n<\/ul>\n<h3>Preference shares<\/h3>\n<ul>\n<li>The cost of preference shares can be found by dividing the preference dividend by the ex div market price:<\/li>\n<\/ul>\n<p>Kps = cost of preference shares<\/p>\n<p>P0 = current ex div preference share price<\/p>\n<p>Dp = preference dividend<\/p>\n<h3>Irredeemable bonds<\/h3>\n<ul>\n<li>Like preference shares, bonds involve a constant annual payment in perpetuity.<\/li>\n<\/ul>\n<p>Kd = cost of debt<\/p>\n<p>I = annual interest payment<\/p>\n<p>P0 = current ex interest market price<\/p>\n<p>Note that interest is tax-deductible.<\/p>\n<h3>Irredeemable bonds<\/h3>\n<p>Calculating the cost of irredeemable bonds:<\/p>\n<ul>\n<li>10% irredeemable bonds<\/li>\n<\/ul>\n<ul>\n<li>Ex interest market price: \uffe172<\/li>\n<\/ul>\n<ul>\n<li>Corporation tax: 30%<\/li>\n<\/ul>\n<ul>\n<li>Kid (before tax) = 10\/72 = 13.9%<\/li>\n<\/ul>\n<ul>\n<li>Kid (after tax) = 13.9 x (1 &#8211; 0.3) = 9.7%<\/li>\n<\/ul>\n<h3>Redeemable bonds<\/h3>\n<ul>\n<li>Redeemable bonds involve several fixed interest payments plus redemption value<\/li>\n<\/ul>\n<p>I = interest payment<\/p>\n<p>RV = redemption value or principal<\/p>\n<p>Kd = cost of debt capital<\/p>\n<p>n = number of years to maturity<\/p>\n<p>CT = corporation tax rate<\/p>\n<p>Essay writing service: <a href=\"http:\/\/www.aceessays.com\/tc\/\">\u8ad6\u6587\u4ee3\u5beb<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Retained earnings Retained earnings have an opportunity cost, which is equal to the cost of equity. The cost of retained earnings can thus be found in the same way as the cost of equity. It is a mistake to see retained earnings as a free source of finance. Preference shares The cost of preference shares can be found by dividing the preference dividend by the ex div market price: Kps = cost of preference shares P0 = current ex div preference share price Dp = preference dividend Irredeemable bonds Like preference shares, bonds involve a constant annual payment in perpetuity. Kd = cost of debt I = annual interest payment P0 = current ex interest market price Note that interest is tax-deductible. Irredeemable bonds Calculating the cost of irredeemable bonds: 10% irredeemable bonds Ex interest market price: \uffe172 Corporation tax: 30% Kid (before tax) = 10\/72 = 13.9% Kid (after<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-493","post","type-post","status-publish","format-standard","hentry","category-notes"],"_links":{"self":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/comments?post=493"}],"version-history":[{"count":1,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/493\/revisions"}],"predecessor-version":[{"id":1523,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/493\/revisions\/1523"}],"wp:attachment":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/media?parent=493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/categories?post=493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/tags?post=493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}