The argument would be that the $75mm deployed towards creating the $100mm could probably be better used elsewhere. If deployed towards something that would hav

The argument would be that the $75mm deployed towards creating the $100mm could probably be better used elsewhere. If deployed towards something that would have a 33% margin, you would be making about $38mm instead of $25mm. Of course, the argument sucks because it ignores the fact that there are massive risks and therefore discounting associated with an unproven revenue stream. And if it is proven, then there should be absolutely no difficulty in getting financing for it with a 33% margin, and that financing would be much cheaper than the cost of shifting the money used to drive the 25% margin earner. Shifting this money means you’re basically paying for the new 33% margin product with money that has been borrowed at a cost of 33% itself...25mm profit on 75mm investment. You can get money from the market at a small fraction of that cost. Borrowing 75mm in the US should not cost more than 7-8mm per Anjum if you have such an obvious opportunity that you were willing to forsake 25mm of earnings for it. And if you’re unable to borrow at a reasonable cost for that project maybe it indicates that the project isn’t as much of a sureshot as you think it is and therefore the 33% margin that is being projected needs to be steeply discounted due to the risk factor. Unfortunately I’ve seen a lot of people learn the metrics, and the ratios but never really understand what they mean and what information they provide, and therefore, what they are useful for.