8.1 Even if construction costs are $355,000, NPV is still positive: NPV PV - $355,000 - $357,143 - $355,000 = $2,143 Therefore, the project is still worth pursuing. The project is viable as long as construction costs are less than the PV of the future cash flow, that is, as long as construction costs are less than $357,143. However, if the opportunity cost of capital is 20%, the PV of the $400,000 sales price is lower and NPV is negative: PV=$400,000 x- 1 1.20 $333,333 ===== NPV PV - $355,000-$21,667 The present value of the future cash flow is not as high when the opportunity cost of capital is higher. The project would need to provide a higher payoff in order to be viable in the face of the higher opportunity cost of capital.