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...

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.

b. Using the factor determined in part (a) and the present value of an annuity of $1 table appearing in this chapter (Exhibit 5), determine the internal rate of return for the proposal.