Opportunity Cost Calculator - Compare Two Choices

Compare buying, renting or two projects with upfront costs, monthly cash flows, resale value and a discount rate.

Same time horizon for both choices

Example: buy equipment versus rent it for 24 months. Replace every amount with your own scenario.

Comparison periodmoAnnual alternative return / discount rate%Currency

Option A

Name

Paid todayUSDMonthly costsUSDMonthly income or savingsUSDValue received at the endUSD

Option B

Name

Paid todayUSDMonthly costsUSDMonthly income or savingsUSDValue received at the endUSD

Compare the alternatives

Opportunity cost of choosing the lower-value option$2,094.03

Higher present value: Buy equipment

Buy equipment

Present value of option A-$5,523.56Net total without discounting: -$5,400.00

Rent equipment

Present value of option B-$7,617.60Net total without discounting: -$8,400.00

Equivalent monthly rate: 0.797%

Both modeled values are below zero. The higher one is only better relative to the other; doing neither may be financially preferable.

Formula and what the comparison means

Present value = − payment today + Σ[(monthly income or savings − monthly costs) ÷ (1 + monthly rate)^month] + final value ÷ (1 + monthly rate)^months. Monthly rate = (1 + annual rate)^(1/12) − 1. The opportunity cost of the lower-value choice is the difference between the two present values.

The rate and future benefits are assumptions, not guaranteed returns. Both choices must provide comparable nonfinancial utility over the same period. Taxes, financing, inflation, changing cash flows, risk and a do-nothing third choice are outside this simplified model unless reflected in your inputs. A higher present value does not guarantee profit.

Microsoft NPV · OpenStax — Opportunity Cost · Omni Calculator

How to compare the opportunity cost of two choices

Name two mutually exclusive options such as buying a machine versus renting the same machine. Give both the same number of months.
For each option, enter what you pay today, recurring monthly costs, monthly income or savings, and any resale or other value received at the end. Use zero for fields that do not apply.
Set an annual alternative return or discount rate that matches your scenario. The calculator converts it to an effective monthly rate and shows each option's present value alongside its nominal total.
The difference between present values is the modeled opportunity cost of selecting the lower-value option. Check the formula, uncertainty and whether doing neither is possible before treating the comparison as a decision.

Opportunity cost questions

Why can the cheaper upfront option be more expensive?

Its recurring costs may outweigh the initial saving when both cash-flow streams are compared over the same period.

Why include resale value only at the end?

That is when this simple model assumes the money is received. If you expect a different sale date, use a different horizon or a more detailed cash-flow tool.

Is the annual return guaranteed?

No. It is a scenario assumption used to value future money today. Test different plausible rates and account for risk separately.