What does a net present value profile tell you, and how is it constructed? How does the IRR enter into the net

present value profile?

What will be an ideal response?

A net present value profile is simply a graph showing how a project's NPV changes as the discount rate changes. To
graph a project's net present value profile, you simply need to determine the project's NPV, first using a 0 percent
discount rate, then slowly increasing the discount rate until a representative curve has been plotted. Perhaps the
easiest way to understand the relationship between the IRR and the NPV value is to view it graphically through the
use of a net present value profile. The IRR is the discount rate at which the NPV is zero.