Net present value Profile is a graphical representation of the NPVs at different stages of the investment in regards to the financial cost. The net present value Profile depicts a relationship between the net present value of the project and the internal rate of return of the project. The value of NPV shows immediate change on altering the cash flows variable value. This graphical depiction helps in strategizing the investment more diligently and accurately as the variable value can be assigned to the cash flow, hence taking into account various scenarios and ruling out maximum risk. The net present value Profile is thus considered as an important tool in project analysis and budgeting for an investment. The net present value Profile gives the following useful information:

• It presents net present value as a variable rate of discount.
• It denotes the direct relationship between the net present value and internal rate of return.
• It pitches both NPV and IRR on the same parameters for a more logical understanding.
• It gives the viability factors for investment in detail and explains if these will suffice as a value addition to the investment or a losing cause.
• It denotes that if the opportunity cost seems high then the project is financially more viable.
• If the profile predicts faster payback or returns then it is considered as more viable for investment.

Net Present Value or NPV can be defined as the integration of the present values (cash flows) with the addition of all the related cash inflows as well as cash outflows. It is derived to give a better perspective on the investment decision to be made with respect to a particular project. The net present value Profile is the most extensive view of an investment because it reveals various aspects of the expected path of the investment. It also gives an exclusive and detailed comparison of internal rate of return and net present value. This is referred to on the same platform and against the same variables such as time. The formula used for the calculation of net present value is as follows:

NPV = S + { Cash flow for t year / (1+ R)^t } + { cashflow for n year /(1 + R)^n }

Where "S" denotes initial investment, "t" denotes the number of year, "R" denotes rate of return, and "n" denotes the number of years.

The formula used for the calculation of internal rate of interest is as follows:

V = -R (1+i)^n - [R(1+i) { (1+i)^n - 1}/ i]

Where "V" stands for expected future value of the investment, "R" stands for present value of the investment, "n" stands for the time period the investment is to be made, and "i" stands for rate of interest for the designated period "n", "^" denotes an exponential figure.

The net present value is not a 100% accurate study but a more intelligently calculated version of the future trends by taking into account all the relevant factors which directly or indirectly influence the returns on investment that will or could be yielded.