Challenges with Opportunity Cost
The main challenge with opportunity costs is that they are hard to accurately calculate. Returns on investments are often estimated rather than hard-set figures.
It is also not always easy to define non-monetary factors like risk, time, skills, or effort. This is not to say trade-offs should not be estimated and considered in business decision-making, but rather that it is only after a choice has been made that managers will have the hindsight to see how each investment decision is compared.
38
366 reads
CURATED FROM
IDEAS CURATED BY
Sunk Costs are explicit and appear on financial statements so it is understandable why these costs are honed in on. Opportunity Costs are implicit and unseen, so they are often overlooked.
“
The idea is part of this collection:
Learn more about moneyandinvestments with this collection
The impact of opportunity cost on personal and professional life
Evaluating the benefits and drawbacks of different choices
Understanding the concept of opportunity cost
Related collections
Similar ideas to Challenges with Opportunity Cost
What is return on investment (ROI)?
Return on investment (ROI) is a way to measure an investment's performance. It also can be used to compare different investments.
- ROI calculation applies to not just trading or investment, but any kind of business or purchase.
- Calculating an estimated ROI base...
6 ideal investments for beginners
- If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money— especially if your company matches a portion of your contributions.
- A robo-advisor. These services manage your investments for you using computer algorit...
Read & Learn
20x Faster
without
deepstash
with
deepstash
with
deepstash
Personalized microlearning
—
100+ Learning Journeys
—
Access to 200,000+ ideas
—
Access to the mobile app
—
Unlimited idea saving
—
—
Unlimited history
—
—
Unlimited listening to ideas
—
—
Downloading & offline access
—
—
Supercharge your mind with one idea per day
Enter your email and spend 1 minute every day to learn something new.
I agree to receive email updates