Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when
A) the borrower has adequate savings.
B) interest rates are rising.
C) interest rates are falling.
D) the cost of borrowing is greater than the interest earned on the savings.
E) interest earned on savings is greater than the interest paid on the loan.

Question

Quizplus · Accepted Answer

If the cost of borrowing is greater than the interest earned on savings, it makes more financial sense to use savings rather than borrow. This is because the amount that would be paid in interest on a loan would exceed the amount of interest earned on savings. Using savings also avoids the potential risks and financial obligations that come with borrowing. Therefore, using savings is recommended in this situation.

Sometimes It May Be Better to Use Savings Rather Than