Why is the cost of issuing new common stock (Kn) higher than the cost of retained earnings (Ke)?

Common stock is the shares in an organisation that are owned by shareholders who have a right to vote in the organisation's meetings and to receive part of the organisation's profits after the preference shareholders have been paid.

While issuing new common stock, one must earn a slightly higher return than Ke, that addressesthe required rate of return of current shareholders. The higher return is required to cover the distribution costs of the new shares.

Suppose the required return for present shareholders is 10% and shares are quoted to the public at $50. A new distribution of shares must earn slightly more than 10% to compensate the corporation for not receiving the full $50 due to sales commissions and other expenses.