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Why can the irr method lead to suboptimal

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Reference no: EM132676700

Problem 1: Why can the IRR method lead to suboptimal decision-making by organizations?

Problem 2: Community Health Center (CHC) is considering spending $50,000 on a blood analyzer. The annual cash profits from the machine will be $7,000 for each of the 7 years of its useful life. The board of directors wants to pursue this investment, because they think the $49,000 CHC will receive is close to the $50,000 cost. What is wrong with the board's logic? What is the IRR on the investment?

Reference no: EM132676700

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