Opportunity Cost Calculator
Calculate the true cost of choosing one option over another. Compare spending vs investing, investment A vs B, and quick value comparisons to see what you give up.
Calculation method
Examples
The money you are about to spend or invest.
Expected annual return if invested (e.g. 7 for 7%).
How many years to project growth.
Opportunity cost
$28,697
If invested
$38,697
If spent
$10,000
Table of Contents
What is Opportunity Cost?
Opportunity cost is the value of the next-best alternative you give up when you make a choice. Every dollar spent, hour worked, or option chosen has an invisible price tag: what you could have done instead.
- A foundational concept in economics, finance, and personal decision-making
- Not only money — also time, attention, and effort
- Often invisible because the alternative never happens
- Quantifying it helps you make better trade-off decisions
In finance, opportunity cost is often expressed as the forgone return on capital. A 10000 USD purchase today, instead of invested at 7 percent for 20 years, has an opportunity cost of about 28700 USD in future value.
How it Works
- Spend vs invest — Calculate what your money would grow to if invested instead of spent. Future value minus amount = opportunity cost of spending.
- Compare investments — Compute future values of two options at their respective return rates. Difference = opportunity cost of choosing the lower option.
- Quick A vs B — Enter two end-state values (or net returns) to see absolute and percentage differences without compounding.
Formulas
Future Value (compound growth)
FV = PV × (1 + r)^n
FV equals PV times (1 plus r) to the power n, where PV is present amount, r is annual return rate (decimal), and n is years. Example: 10000 USD times 1.07 to the power 20 is about 38697 USD.
Opportunity cost
Opportunity cost = Best alternative − Chosen option
Opportunity cost = Value of best alternative minus Value of chosen option. If FV invested is 38697 USD and you spend the 10000 USD now, opportunity cost = 28697 USD.
Percentage difference
Percentage difference = (Better minus Worse) divided by Worse times 100. Useful for comparing options of different sizes.
Common Use Cases
- Big purchases: See the long-term cost of buying a car, boat, or luxury item vs investing the cash.
- Investment choices: Compare index funds, bonds, or savings accounts over the same horizon.
- Career decisions: Quantify income forgone when going back to school or switching to a lower-paying role.
- Capital allocation: Pick between paying down debt, investing, or buying equipment for a business.
Frequently Asked Questions
If you spend 5000 USD on a vacation instead of investing it at 7 percent for 20 years, the opportunity cost is the 14348 USD you would have had — meaning the true long-term price of the vacation is roughly 19348 USD.
Use a realistic long-term rate for your alternative. Historical stock market average is around 7 percent real (10 percent nominal). For safer alternatives, use 4 to 5 percent (bonds) or 1 to 4 percent (savings/HYSA).
Use a real return (after inflation) for purchasing-power decisions, or a nominal return for raw dollar comparisons. This calculator uses whatever rate you enter — be consistent across options.
No. Sunk cost is money already spent and unrecoverable; opportunity cost is the value of an alternative you do not pursue. Opportunity cost is forward-looking.
No. All calculations run in your browser. Nothing is sent to our servers.