Compare the return you gave up on the next best alternative.
Please do not make financial decisions based on these results.
What is the Opportunity Cost Calculator?
Compare the return you gave up on the next best alternative. To use the Opportunity Cost Calculator, enter amount, chosen option return, best alternative return, years; it returns opportunity cost (dollars), value of chosen option, value of alternative, and shows them instantly as you type.
Where the Opportunity Cost Calculator fits
Compare the return you gave up on the next best alternative. The main figure it returns is the Opportunity cost (dollars), worked out from the values you enter.
It belongs with the other investment tools. If you are comparing options or checking a result from another angle, try the Expected Utility Calculator, Investment Fee Calculator or the Year Over Year Growth Calculator.
How to use the Opportunity Cost Calculator
- Fill in the fields. You will need Amount ($), Chosen option return (%), Best alternative return (%), Years. Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Opportunity cost (dollars), and the cards below show Value of chosen option, Value of alternative. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Opportunity Cost Calculator using the default values shown in the calculator above:
Inputs
| Amount ($) | 20,000 |
|---|---|
| Chosen option return (%) | 3 |
| Best alternative return (%) | 7 |
| Years | 5 |
Results
| Opportunity cost (dollars) | $4,865.55 |
|---|---|
| Value of chosen option | $23,185.48 |
| Value of alternative | $28,051.03 |
With these inputs the calculator returns Opportunity cost (dollars): $4,865.55. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Amount ($) from 20,000 to 24,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Opportunity cost (dollars) | $4,865.55 | $5,838.66 | +20% |
| Value of chosen option | $23,185.48 | $27,822.58 | +20% |
| Value of alternative | $28,051.03 | $33,661.24 | +20% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Opportunity Cost Calculator reports Opportunity cost (dollars), value of chosen option and value of alternative. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
Is opportunity cost always visible on a bill?
No. It is the value of the path not taken, so it appears in no statement.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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