Opportunity cost refers to the value of what you have to give up ( forgo ) in order to choose something else.

Opportunit cost helps you determine what you stand to lose by picking either option.

**Formula to calculate opportunity cost.**

FO – Return on best forgone option.

CO – Return on chosen option.

**Example:**

Chris has $15,000 worth of stock he can sell now for $20,000. He wanted to wait two months because the stock’s worth was expected to increase to $30,000. He decides to sell now . Calculate the opportunity cost.

Therefore, opportunity cost will be the difference between the $20,000 and the price he would have gotten if he sold the stock in two months time.

Therefore, the opportunity cost is $ 10,000.