Natural Foods is considering the purchase of new food processing technology, which would cost $900,000 and would

Question:

Natural Foods is considering the purchase of new food processing technology, which would cost $900,000 and would generate $150,000 in annual cost savings.
No salvage is expected on the technology at the end of its 10-year life. The firm's and are both 10 percent.
a. Calculate the for the project. Does the IRR indicate the project is acceptable?
b. What qualitative factors should the company consider in evaluating the investment?

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...