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1) Linda Bellich should assign a cost to any depreciation-generated fund because depreciation is assumed to be substitute for all type of financing, therefore it

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1) Linda Bellich should assign a cost to any depreciation-generated fund because depreciation is assumed to be substitute for all type of financing, therefore it should be assigned the firm's WACC using retained earning as the common equity component. However, this cost should not be used in calculating average cost of capital. 2) Bellich should assign a cost to funds from retained earning because retained earning is considered a proxy for common stock. Therefore, it should be assigned the opportunity cost, which is equivalent to the firm's cost of equity. No, because it is an internally generated funds

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