From economics, we know than an opportunity cost is the cost of passing up the next best alternative. For example, the opportunity cost of a building is its market value. By deciding to continue to own it, the firm is foregoing the cash it could receive from selling it. Economics teaches the TINSTAAFL principle: ‘‘There is no such thing as a free lunch.’’ Capital budgeting analysis frequently applies this principle to existing assets. If a firm is thinking about placing a new manufacturing plant in a building it already owns, the firm cannot assume that the building is free and assign it to the project at zero cost. The project’s cash flow estimates should include the market value of the building as a cost of investing since this represents cash flows the firm will not receive from selling the building.