Based on the cost, the inflows, and the cost of capital, the project IRR is 15.24% and NPV is $81.44
The NPV is:
= Present value of inflows - initial cost
As the inflows are constant, we can find the present value as an annuity:
= (Inflow x Present value interest factor of annuity, 12%, 5 years) - 1,000
= (300 x 3.6048) - 1,000
= $81.44
The IRR can be calculated by Excel as shown in the attached file. List the cashflows and the years and then use the IRR function as shown:
= 15.24%
In conclusion, IRR is 15.24% and the NPV is $81.44
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