Opportunity Cost

Opportunity Cost is the income you lose by choosing one investment over another.

Let’s say you have a chance to invest $10,000 in a new business. If you didn’t invest in that business, you could put the $10,000 in the bank and earn 2% interest. .02 x $10,000 =$2,000. $2,000 is the opportunity cost. By investing in the new business, you lost the opportunity to earn $2,000.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/opportunity-cost/