The value of the next-best alternative you give up by choosing one option.
Every financial decision has an opportunity cost, even doing nothing — cash sitting idle has the opportunity cost of the return it could have earned invested. It is the concept behind rent-vs-buy and lease-vs-buy comparisons.
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FAQ
What is Opportunity Cost in simple terms?
Every financial decision has an opportunity cost, even doing nothing — cash sitting idle has the opportunity cost of the return it could have earned invested. It is the concept behind rent-vs-buy and lease-vs-buy comparisons.