Why is issuing common stock more expensive than using retained earnings?

a.) It is not. Both sources of capital are the same, and represent owner's equity.

b.) Because new common stock is riskier than retained earnings, and therefore more expensive.

c.) Actually, since retained earnings are real money, while stock is only shares of the company, retained using earnings is more expensive.

d.) Because of flotation, i.e.: the added cost of selling the new shares of stock.

Because stock gains pay higher taxes than retained earnings.