Opportunity Cost Of Capital Definition. The opportunity cost of capital is the difference between the returns on the two projects. Example of the opportunity cost of capital for example the senior management of a business expects to earn 8 on a long term 10 000 000 investment in a new manufacturing facility or it can invest the cash in stocks for which the expected long term return is 12.
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Expected return that is forgone by investing in a project rather than in comparable financial securities. The opportunity cost of capital 1. The difference in return between an investment one makes and another that one chose not to make.
The opportunity cost of capital is the difference between the returns on the two projects.
Opportunity cost of capital. For investors the cost of capital is the opportunity cost of making a specific investment as well as the rate of return that can be earned by putting money into an investment. If you choose one alternative over another then the cost of choosing that alternative becomes your opportunity cost. This may occur in securities trading or in other decisions.
