5. NPV profiles An NPV profile plots a projects NPV at various costs of capital, labeled "A" and "B" in the graph. A projects NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project.

A. Accept or Reject

B. Accept or Reject

This NPV profile demonstrates that as the cost of capital increases, the projects NPV ____

increases

decreases

NPV (Dollars) 400 300 200 A 100 0 B -100 -200 0 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent)