[Verse 1] When a project comes your way, need to make the right decision Calculate the net present value, that's your starting vision Take the cash flows that will come, discount them to today Subtract initial investment, see if profits pay [Chorus] NPV and IRR, payback time to see Profitability index, ratios hold the key Incremental cash flows matter, sunk costs throw away Real options give you choices, audit at the end of day [Verse 2] IRR's the magic rate where NPV equals zero If it beats your required return, then you've found a hero Payback period tells you when you'll break even clean Add discounting to the mix, get a clearer scene [Chorus] NPV and IRR, payback time to see Profitability index, ratios hold the key Incremental cash flows matter, sunk costs throw away Real options give you choices, audit at the end of day [Verse 3] Mutually exclusive means you pick just one Capital rationing limits funds, can't do all the fun Look at profitability index when the cash is tight Rank your projects high to low, choose the ones that shine bright [Bridge] Opportunity costs count, what you're giving up Externalities affect others, fill that data cup Cannibalization steals sales from your other lines Include them in your model, read between the lines [Verse 4] Real options give you power, flexibility to choose Delay until conditions change, expand if you can't lose Abandon when things go wrong, cut losses while you can Post-audit checks your work, learn to make a better plan [Chorus] NPV and IRR, payback time to see Profitability index, ratios hold the key Incremental cash flows matter, sunk costs throw away Real options give you choices, audit at the end of day [Outro] Capital decisions made with care and calculation Building wealth through smart investments, growing every nation
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