Which of the following statements is FALSE in regard to borrowing money?
A) In general, the greater the risk associated with a loan the greater the interest rate charge will be.
B) Interest expense on a loan may impact prices and profits.
C) Borrowing money is usually less expensive than reinvesting cash generated from operations.
D) A company with a successful marketing strategy has its own internal source of funds-profits.
E) None of these is false.

Question

Quizplus · Accepted Answer

Borrowing money is usually more expensive than reinvesting cash generated from operations because there is interest expense and potential fees associated with taking out a loan. In contrast, reinvesting cash generated from operations is using funds that the company already has without incurring any additional costs.

Which of the Following Statements Is FALSE in Regard to Borrowing