NPV Profile

An NPV profile is a graph that shows how the net present value (NPV) of a project changes when the discount rate varies. It helps investors see at which discount rates the project is profitable or not. The profile typically slopes downward: as the discount rate increases, NPV decreases. The point where the curve crosses zero is the project's internal rate of return (IRR). This tool is useful for comparing projects and understanding how sensitive a project's value is to changes in the cost of capital or risk assumptions.