The missed profit caused by choosing a different investment. The basic formula is the return earned by the investment that was not selected minus the return earned by the investment that was selected. Example: You are choosing between two investments, A and B. You select A. A later earns 8% while B earns 10%. Your opportunity cost is therefore ‑2%. Opportunity Cost can be applied to every aspect of life: choosing to go to a movie means you lose the opportunity to go bowling. Considering opportunity costs helps you make better, more informed decisions.