XI. What criteria should be used to determine if it makes sense to purchase a good on credit?

a. if the useful life of the asset is less than 5 years

b. if the good is a long-lasting asset and the borrowed funds will be repaid before the asset is worn out

c. if the good is something that is really needed, but funds are not currently available to purchase it

d. if the funds can be borrowed at a low interest rate

If one does not budget and save regularly for unexpected expenses, the alternative is likely to be

a. inconsequential, because bad things do not happen if you do not plan for them.

b. deferral of the costs of an unexpected event until a time when it is more convenient to pay.

c. running up credit card balances or borrowing funds on highly unfavorable terms.

d. all of the above.

If an individual has an outstanding balance on a credit card at 15 percent interest, money in a savings account earning 5 percent, and an opportunity to invest some money earning a 12 percent return, the individual should

a. use all available funds in the investment opportunity.

b. pay a small amount on the credit card and save the rest.

c. use all available funds, including savings, to pay off the credit card.

d. put an equal amount of money toward each option.