Opportunity Cost Calculator

Compare what the same money would grow to in a chosen option versus the best alternative you pass on, and see the future-value gap between the two.

Quick Facts

Formula
Opportunity Cost = FV(foregone) − FV(chosen)
Each future value uses FV = P × (1 + r)^t, the same starting amount compounded annually at that option's return.
Concept
Cost of the next-best alternative
Opportunity cost is what you give up by picking one option instead of the highest-value alternative available.

Your Results

Calculated
Opportunity cost
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Future-value gap you'd give up
Chosen option: future value
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What the investment grows to
Foregone option: future value
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What the alternative would grow to
Opportunity cost (% of amount)
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Cost relative to the initial amount

Ready

Enter the investment amount, both expected returns, and the time horizon, then press Calculate.

How the Opportunity Cost Calculator works

Opportunity cost is what you give up by choosing one option over the next-best alternative. This calculator makes that idea concrete for money: it projects the same starting amount forward under two different annual returns — the option you actually choose and the option you pass on — and reports the gap between the two future values.

The formula

Each option's future value uses the standard compound-growth formula FV = P × (1 + r)t, where P is the starting amount, r is the annual return as a decimal, and t is the number of years. Opportunity cost is then:

Opportunity Cost = FV(foregone option) − FV(chosen option)

If the foregone option's future value is higher, the result is positive: that's the value you're giving up. If your chosen option actually has the higher return, the difference is zero or negative — there's no opportunity cost, because the option you picked already beats the alternative.

Worked example

Put $10,000 into an option earning 4% a year for 10 years, when a foregone alternative would have earned 8% a year. The chosen option grows to about $10,000 × 1.0410 ≈ $14,802. The foregone option grows to about $10,000 × 1.0810 ≈ $21,589. The opportunity cost is the difference: roughly $6,787, or about 68% of the original $10,000 — the extra growth given up by not choosing the higher-return option.

What moves the result most

  • The return gap: the further apart the two rates are, the faster the opportunity cost grows, since compounding widens small percentage differences over time.
  • Time horizon: because both future values grow exponentially, doubling the number of years more than doubles the eventual gap between them.
  • Investment amount: the dollar opportunity cost scales directly with the starting amount, but the opportunity cost as a percentage of that amount does not change.

What this calculator does not do

This is a simple return-based comparison, not investment advice. It assumes both options compound at a fixed annual rate for the full period, with no added contributions, withdrawals, taxes, or fees. It does not weigh risk, volatility, or liquidity — a higher-return option is often also a higher-risk one, and that trade-off is not captured here. Use the result as a starting point for comparing choices, not as a guarantee of future performance.

Frequently Asked Questions

How is opportunity cost calculated?
Opportunity Cost = FV(foregone option) minus FV(chosen option), where each future value is FV = P × (1 + r)^t: the same starting amount P compounded at that option's annual return r over t years. The result shows how much more (or less) the foregone alternative would have been worth.
What if my chosen option has the higher return?
Then FV(chosen) is larger than FV(foregone), so the formula gives zero or a negative opportunity cost. In that case the calculator reports no opportunity cost, since choosing that option already outperforms the alternative you compared it to.
Does the calculation account for compounding?
Yes. Both future values use annual compounding: FV = P × (1 + r)^t. It does not model different compounding frequencies, contributions added over time, taxes, or fees for either option.
Is opportunity cost the same as risk-adjusted return?
No. This calculator compares two stated growth rates over the same time horizon; it does not weigh risk, volatility, liquidity, or the likelihood that either return is actually achieved. Treat the result as a starting comparison, not a risk assessment.

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