Use of the Marginal Cost of Capital

Multiple Choice

Use of the marginal cost of capital:

A) acknowledges that when retained earnings is used up as a source of equity the cost of capital decreases as new common stock is sold to support more growth.
B) recognizes that the return from the last dollar of funds generated should be less than the cost of the last dollar of funds raised.
C) is highly dependent on the investment opportunities available to the firm.
D) is the cost of borrowing privately.