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

Question

Quizplus · Accepted Answer

If the rate of return is higher than the cost of borrowing, the investor will make money after paying back the loan. This is because the return on their investment is more than the cost of borrowing, so they will have more money than they started with even after paying back the borrowed funds.

If the Rate of Return Is Higher Than the Cost