Opportunity Cost (OC) Calculator

Calculate opportunity cost with our calculator. Enter principal, rate of return, investment months, tax rate, and inflation rate to see total gains.

Result Total Gains With Inflation $0 Total Savings After Tax $0 Nominal Opportunity Cost $0 Tax On Capital Gains $0 Nominal Gains After Tax $0

Total Gains With Inflation Formula

Total gains with inflation = Total savings after tax * ((1 - (Inflation rate/100)) ^ (Investment months / 12))

Total gains with inflation = 15000 * ((1 - (4/100)) ^ (12 / 12)) = 14400

Total Savings After Tax Formula

Total savings after tax = Nominal gains after tax + Principal

Nominal gains after tax is $8,000. Principal is $10,000. Total savings after tax is $18,000.

Nominal Opportunity Cost Formula

Nominal opportunity cost = Principal * ((1 + (Rate of return / 100) / 12) ^ Investment months - 1)

Principal = 10,000 Rate of return = 5 Investment months = 24 (2 years) Calculation: 10,000 * ((1 + (5 / 100) / 12) ^ 24 - 1) = 1,049.41

Tax On Capital Gains Formula

Tax on capital gains = Nominal opportunity cost * (Tax rate/100)

Nominal opportunity cost $12,000 * (20/100) = $2,400 tax on capital gains.

Nominal Gains After Tax Formula

Nominal gains after tax = Nominal opportunity cost - Tax on capital gains

Nominal gains after tax = 250000 - (20000 + (0.20 * 50000)) = $220,000

Meaning

The Opportunity Cost (OC) Calculator helps you understand what you have to give up when choosing one option over another. It measures the value of the next best alternative that is sacrificed when making a decision.