Use of the Marginal Cost of Capital

question 25

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 rises as new common stock is sold to support more growth.
• B) recognizes that the return from the last dollar of funds generated should be equal to the cost of the last dollar of funds raised.
• C) two of the other answers are correct.
• D) none of the other answers are correct.

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Definitions:

Kindergartners

Child within the age group that attends kindergarten, the educational setting for children prior to their entrance into first grade.

Empty Praise

Compliments or commendations without genuine backing or substance, which may not have a positive impact on the recipient.

Inflated Self-esteem

An excessively high regard for one's own self-worth or abilities, often without sufficient grounds or reality.

Deflated Self-esteem

A lowered sense of one's own value or worth.