Question: A removal company is evaluating a proposal to replace an older van with a new and larger one. The estimated cost of the new van
A removal company is evaluating a proposal to replace an older van with a new and larger one. The estimated cost of the new van is $65,000. Using a discount rate of 18 per cent, the company identified that net present value for the new van was -$5,000. Based on this information, which of the following statements is true? Using a higher discount rate should cause the net present value to become positive. If the actual cost of the new van ends up being less than $60,000, the net present value will become positive. If the company purchases the van, they are guaranteed a rate of return of 18 per cent. The actual rate of return on the new van is negative
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