Opportunity Cost Of Capital Formula. Opportunity cost formula opportunity cost can be termed as the next best alternative of a particular option which has been executed or about to execute. The best way to calculate the opportunity cost of capital is to compare the return on investment on two different projects.
Fo return on best foregone option begin aligned text opportunity cost text fo text co textbf where. The opportunity cost of capital of investing in the manufacturing facility is 2 which is the difference in return on the two investment opportunities. Opportunity cost return of most lucrative option return of chosen option.
Review the calculation for roi return on investment which is roi current price of the investment cost of the investment cost of the investment.
If we think about the cost of opportunity like this then the equation is very easy to understand and it s straightforward. Opportunity cost formula opportunity cost can be termed as the next best alternative of a particular option which has been executed or about to execute. Opportunity cost formula and calculation opportunity cost fo co where. The formula for opportunity cost in dollars can be given as opportunity cost opportunity cost in money invested opportunity cost 2 100 000 opportunity cost 2 000 the answer is 2 000.
