[Verse 1] Sarah's building widgets, needs a brand new machine Last year's market research cost her fifty grand clean That money's already spent, can't get it back again Sunk costs are history, don't let them fool your brain The machine will cost two hundred, save her fifty each year But wait - that warehouse space could rent for thirty, crystal clear That rental income lost becomes a hidden fee Opportunity cost matters in your CFA decree [Chorus] Incremental, incremental - only future cash that flows Sunk costs sink like anchors, let the bygones go Opportunity knocking, count what you'll forsake Relevant cash flows only - that's the choice you make IRR and NPV depend on getting this right Incremental, opportunity - keep sunk costs out of sight [Verse 2] Tim's replacing old equipment, spent on training yesterday Those employee hours logged won't change his project's pay Focus on tomorrow's numbers, what will truly shift Old expenses can't be altered - treat them as a gift The new system saves him labor, forty thousand yearly gain Plus he'll sell the old machine for fifteen, pure and plain But his factory could lease out for twenty every year That's the cost of choosing this path - opportunity's frontier [Chorus] Incremental, incremental - only future cash that flows Sunk costs sink like anchors, let the bygones go Opportunity knocking, count what you'll forsake Relevant cash flows only - that's the choice you make IRR and NPV depend on getting this right Incremental, opportunity - keep sunk costs out of sight [Bridge] Three simple rules to memorize Incremental - what's the change? Sunk costs dead - don't agonize Opportunity's exchange What you give up has a price Factor in what you'll sacrifice [Chorus] Incremental, incremental - only future cash that flows Sunk costs sink like anchors, let the bygones go Opportunity knocking, count what you'll forsake Relevant cash flows only - that's the choice you make IRR and NPV depend on getting this right Incremental, opportunity - keep sunk costs out of sight [Outro] Future flows and chances missed Build your capital budgeting list Relevant versus noise - now you know the difference
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