For capital budgeting purpose, the firm should consider retained earnings as the first source of capital (i.e., use these funds first) because retained earnings is the money earned and saved by the firm for future use and thus cost nothing.

True

False

Other things held constant, an increase in the cost of capital will result in a decrease in a project’s IRR.

True

False

Answer rating: 100% (QA)

QUESTION For capital budgeting purpose the firm should consider retained earnings as the first sourc... View the full answer