If you are using the output of an APPLY block as the input for another then you are likely to find a performance hit after x "levels of nesting". x will depend on what you're doing but with the simplest of cases I've usually found it to be 6 or 7.
http://www.sqlservercentral.com/articles/T-SQL/97545/[/url]
For fast, accurate and documented assistance in answering your questions, please read this article.
Understanding and using APPLY, (I) and (II) Paul White
Hidden RBAR: Triangular Joins / The "Numbers" or "Tally" Table: What it is and how it replaces a loop Jeff Moden