Evaluate your alternatives. For example, if you have $40,000 you may need to decide between purchasing a new $40,000 car that you love or a less-desirable used car for $18,000 and investing the remaining $22,000 into an interest-bearing savings account.
Calculate the opportunity cost associated with your more-desirable option. In the above example, the more-desirable option is to purchase the new car for $40,000. The opportunity cost will be the loss associated with not investing the $22,000 into a savings account if you bought the used car. Let's assume you can invest the 22,000 into a conservative interest-bearing retirement account at 8% and you can leave the money in the account for 30 years without touching it. Using a financial calculator, at the end of 30 years, the account would have grown to $221,378.45. In this scenario, the opportunity cost of purchasing the $40,000 is $221,378.45
Calculate the opportunity cost associated with purchasing the less-desirable option. Continuing with the example, the less-desirable option is to purchase the used car for $18,000. The used car will require more maintenance than the new car. Let's assume that the used car will require $1,000 a year more in maintenance than the new car. In this case, the opportunity cost of not purchasing the new car is $1,000 a year.