Toslink vs. RCA

So, I get that every digital signal needs to be converted to analog before it is amplified and sent to speakers. Keeping that in mind, I’m trying to figure out whether it’s better to use Toslink or RCA connection for my used Bluesound N100 streamer and new NAD C328 integrated amp (both have built-in DACs).

I THINK if I use toslink, that makes the C328 the default DAC, and it will do the analog conversion; and if I use RCA connectors, which can only handle analog signals, then the N100does the conversion? Is that right? 

Given all that, which is best for setting this system up: toslink or RCA? (I think the DACs are pretty comparable in both units.)

Related question: I have a ton of old RCA cables laying around. Is it worth spending $75 (AudioQuest) or $150 (Kimber) on better-quality RCA cables versus using the basic stuff? I’m a relative newbie to audio gear, and I’m trying to be budget-conscious about this set-up. (I guess same question on buying more $ toslink cable if that’s the way I go)

Thanks!