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3. Use of the marginal cost of capital a. acknowledges that when retained earnings is used up as a source of equity the cost of

3. 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. both a and b are correct. d. none of these are correct.

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