Cameo Inc ,A Local Company Specialising in Home Repairs,is Considering Replacing

question 52

Multiple Choice

Cameo Inc. ,a local company specialising in home repairs,is considering replacing its older van with a new and larger one.The estimated cost of the new van will be $65 000.Using a discount rate of 18 per cent,the company calculates a net present value for the new van of $(5000) .Based on this information,which of the following statements is true?

• A) The actual rate of return on the new van is negative.
• B) If the company purchases the van,they are guaranteed a rate of return of 18 per cent.
• C) Using a higher discount rate should cause the net present value to become positive.
• D) If the actual cost of the new van ends up being less than $60 000,the net present value will become positive.

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Definitions:

Résumé

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Appropriate Emphasis

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