Cameo Inc, a Local Company Specializing in Home Repairs, Is Considering

Cameo Inc., a local company specializing in home repairs, is considering replacing its older van with a new and larger one. The estimated cost of the new van will be $45,000. Using a discount rate of 16%, the company calculates a net present value for the new van of $(7,000) . 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 16%.
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 $38,000, the net present value will become positive.