A borrower finds that the incremental cost of borrowing an extra $10,000 is 14%.A second loan can be obtained at 15% so the borrower would be better off borrowing a smaller amount on the original loan and borrowing $10,000 with a second loan.

Question

Quizplus · Accepted Answer

The given information is not sufficient to conclude whether the borrower would be better off taking a smaller amount on the original loan and borrowing $10,000 with a second loan. We would need to know the interest rate of the original loan to make this determination.

A Borrower Finds That the Incremental Cost of Borrowing an Extra