The NPV profile is a graph that illustrates a project's NPV against various discount rates, with the NPV on the y-axis and the cost of capital on the x-axis. To begin, simply calculate a project's NPV using different cost-of-capital assumptions. Once these are calculated, plot the values on the graph.

Figure 11.5

 Look Out! Since the IRR is the discount rate where the NPV of a project equals zero, the point where the NPV crosses the x-axis is also the project's IRR.

Cash Flow and NPV Applications

Related Articles
1. Investing

### Internal Rate of Return: An Inside Look

Use this method to choose which project or investment is right for you.

### Capital Budgeting: Which is Better, IRR or NPV?

Using internal rate of return and net present value for capital budgeting evaluations often end in the same result. But there are times when using NPV to discount cash flows makes more sense.
3. Investing

### Internal Rate of Return Formula for Excel

The internal rate of return, or IRR, is a popular metric businesses use to measure a projectâ€™s return on investment.

### Calculating the Internal Rate of Return Using Excel

The internal rate of return on investments is explained and illustrated in different investment scenarios.
5. Investing

### Private Equity on Steroids: How Debt Fuels Outsized Returns

Hot Air: Many private equity firms use a legal technique that can boost returns by 25% or more, Bloomberg says

### Options Risk Graphs: Visualizing Profit Potential

With a single diagram, you can see how price, time and volatility affect potential gains.

### Modified Internal Rate of Return (MIRR)

Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.

### A Guide on the Risk-Adjusted Discount Rate

When a project or investment faces higher amounts of risk or uncertainty, it may be appropriate to utilize the risk-adjusted discount rate.