NPV profile

NPV profile

A graph of NPV as a function of the discount rate.
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A continuous graph of the NPV schedule is called the NPV profile. In Figure 1, the vertical axis shows the interest rate and the horizontal axis shows the net present value.
The marginal efficiency of capital can also be found on the NPV profile. Since the marginal efficiency of capital is the discount rate that makes the net present value equal zero, the marginal efficiency of capital is the point at which the NPV profile intersects the y-axis.
In Figure 6 the wooden bridge's NPV profile intersects the y-axis at a higher point than the steel bridge's NPV profile, so the wooden bridge has a higher MEC ranking than the steel bridge.
NPV profiles can also be used to illustrate how NPV rankings depend on the interest rate.
In Fig 6 the NPV profiles for both variants (SDH and DWDM) are shown.