A business will want to borrow to undertake an investment project when the rate of return on that project is:

lower than the interest rate

higher than the interest rate

higher than the exchange rate

equal to the inflation rate

1 answer

A business will want to borrow to undertake an investment project when the rate of return on that project is higher than the interest rate.

This is because if the return on the investment exceeds the cost of borrowing (the interest rate), it indicates that the project is likely to generate positive net returns and therefore can be considered a worthwhile investment.