You are going to make a substantial purchase, You have enough money to pay cash, but don't know if that's the way to make best use of your assets. Maybe you should take out an instaliment loan to make the purchase and invest the cash you would otherwise have used to pay for it. Use the information provided to complete the following worksheet and analyze how the numbers work out most favorably for you. For simplicity, compounding is ignored in calculating both the cost of interest and interest earnings. (Note: Enter your dollar answers rounded to the nearest two cents and precede numbers that are less than zero (0) with a minus sign (). Cost of Paying Cash 9. Annual interest earned on savings (5%1) 10. Annual after-tax interest earnings ($ x \%) 11. Total after-tax interest eamings over life of loan (\$ x years) Net Cost of Borrowing 12. Difference in cost of borrowing versus cost of paying cash Based on the numbers alone, you should because: The interest on a loan will cost you more than the interest you would earn if you invested the principal. If you invest the principal, youll earn more interest than youll pay on the loan