If the rate of return is higher than the cost of borrowing the:
A) investor will lose money on net after paying back the loan.
B) investor will make money on net after paying back the loan.
C) saver will make less money on net than the borrower.
D) borrower will make more money on net than the saver.

Question

Quizplus · Accepted Answer

If the rate of return is higher than the cost of borrowing, the investor will make money on net after paying back the loan. This is because they are earning more on their investment than they are paying in interest on the loan.

If the Rate of Return Is Higher Than the Cost