Internal Rate of Return Method The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $113,550 and annual...

Internal Rate of Return Method

The internal rate of return method is used by Testerman Construction Co. in analyzing a capital expenditure proposal that involves an investment of $113,550 and annual net cash flows of $30,000 for each of the six years of its useful life.

a.Determine a present value factor for an annuity of $1, which can be used in determining the internal rate of return.If required, round your answer to three decimal places.

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b.Using the factor determined in part (a) and the present value of an annuity of $1 table above, determine the internal rate of return for the proposal.
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