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5/23/07 - EP14 'Daily Rant' - Opportunity Cost
OpportunityCostCalc.xls
The idea here is that you do something, in this case diner for two at PF Chang's, average cost $65. Now with a little more information you can figure out what you are losing in the long run, based on the idea that you would have saved the money in some kind of interest bearing, or investment account if you would not have gone to diner. You could have increased that $65 by over 1,000% if you had just bought a certificate of deposit, or a bond. Download the sheet and mess with it. You know what rates you might get better than I would. Instructions are below.

Download the spreadsheet that will help you calculate your own opportunity cost. The example below is the true cost for a diner for two at PF Chang's. I put in my Birthday, important since it has to calculate your age, Date of the purchase, The Age I expect to Retire, The Interest Rate I could expect to get if I put the money in the bank. You can get much more if it is invested, but most banks are offering about 1.8% in regular interest savings account. However, if you bought a bond you should not expect less than 7%. Especially, over a period like 33 years like in the example. Finally, put in the Cost of the thing you are buying.



Example of what the sheet looks like
 

THE BOTTOM LINE PODCAST
OPPORTUNITY COST CALCULATOR
  BIRTHDATE 10/31/75      
  DATE OF PURCH 05/23/07      
  EXPT RETIRE AGE 65.00   33.42 TOTAL YEARS
  AGE AT PURCH 31.58   608.56 TOTAL INT
  EXPECTED INT. RT 7.00%   673.56 TOTAL COST
  COST OF ITEM $65.00   1036% INCREASE
           
DATE AGE INT   BAL  
05/07 31.52 0.38   65.38  
06/07 31.61 0.38   65.76  
07/07 31.69 0.38   66.14  
08/07 31.77 0.39   66.53  
09/07 31.86 0.39   66.92  
10/07 31.94 0.39   67.31  
11/07 32.02 0.39   67.70  
12/07 32.11 0.39   68.10  
01/08 32.19 0.40   68.49  
02/08 32.28 0.40   68.89  
03/08 32.36 0.40   69.29  
04/08 32.44 0.40   69.70  
05/08 32.52 0.41   70.11  
06/08 32.61 0.41   70.51  
07/08 32.69 0.41   70.93  
08/08 32.78 0.41   71.34  
09/08 32.86 0.42   71.76  
10/08 32.94 0.42   72.17  
11/08 33.03 0.42   72.60  
12/08 33.11 0.42   73.02  
01/09 33.19 0.43   73.44  
02/09 33.28 0.43   73.87  
03/09 33.36 0.43   74.30  
04/09 33.44 0.43   74.74  
05/09 33.52 0.44   75.17  
06/09 33.61 0.44   75.61  
07/09 33.69 0.44   76.05  
08/09 33.78 0.44   76.50  
09/09 33.86 0.45   76.94  
10/09 33.94 0.45   77.39  
11/09 34.03 0.45   77.84  
12/09 34.11 0.45   78.30  
01/10 34.19 0.46   78.75  
02/10 34.28 0.46   79.21  
03/10 34.36 0.46   79.68  
04/10 34.44 0.46   80.14  
05/10 34.52 0.47   80.61  
06/10 34.61 0.47   81.08  
07/10 34.69 0.47   81.55  
08/10 34.78 0.48   82.03  
09/10 34.86 0.48   82.51  
10/10 34.94 0.48   82.99  
11/10 35.03 0.48   83.47  
12/10 35.11 0.49   83.96  
01/11 35.19 0.49   84.45  
02/11 35.28 0.49   84.94  
03/11 35.36 0.50   85.44  
04/11 35.44 0.50   85.93  
05/11 35.52 0.50   86.43  
06/11 35.61 0.50   86.94  
07/11 35.69 0.51   87.45  
08/11 35.78 0.51   87.96  
09/11 35.86 0.51   88.47  
10/11 35.94 0.52   88.99  
11/11 36.03 0.52   89.50  
12/11 36.11 0.52   90.03  
01/12 36.19 0.53   90.55  
02/12 36.28 0.53   91.08  
03/12 36.36 0.53   91.61  
04/12 36.44 0.53   92.15  
05/12 36.53 0.54   92.68  
06/12 36.61 0.54   93.22  
07/12 36.69 0.54   93.77  
08/12 36.78 0.55   94.31  
09/12 36.86 0.55   94.86  
10/12 36.95 0.55   95.42  
11/12 37.03 0.56   95.97  
12/12 37.11 0.56   96.53  
01/13 37.20 0.56   97.10  
02/13 37.28 0.57   97.66  
03/13 37.36 0.57   98.23  
04/13 37.44 0.57   98.81  
05/13 37.53 0.58   99.38  
06/13 37.61 0.58   99.96  
07/13 37.69 0.58   100.55  
08/13 37.78 0.59   101.13  
09/13 37.86 0.59   101.72  
10/13 37.95 0.59   102.32  
11/13 38.03 0.60   102.91  
12/13 38.11 0.60   103.51  
01/14 38.20 0.60   104.12  
02/14 38.28 0.61   104.72  
03/14 38.36 0.61   105.34  
04/14 38.44 0.61   105.95  
05/14 38.53 0.62   106.57  
06/14 38.61 0.62   107.19  
07/14 38.69 0.63   107.81  
08/14 38.78 0.63   108.44  
09/14 38.86 0.63   109.08  
10/14 38.95 0.64   109.71  
11/14 39.03 0.64   110.35  
12/14 39.11 0.64   111.00  
01/15 39.20 0.65   111.64  
02/15 39.28 0.65   112.29  
03/15 39.36 0.66   112.95  
04/15 39.44 0.66   113.61  
05/15 39.53 0.66   114.27  
06/15 39.61 0.67   114.94  
07/15 39.69 0.67   115.61  
08/15 39.78 0.67   116.28  
09/15 39.86 0.68   116.96  
10/15 39.95 0.68   117.64  
11/15 40.03 0.69   118.33  
12/15 40.11 0.69   119.02  
01/16 40.20 0.69   119.71  
02/16 40.28 0.70   120.41  
03/16 40.36 0.70   121.11  
04/16 40.45 0.71   121.82  
05/16 40.53 0.71   122.53  
06/16 40.61 0.71   123.25  
07/16 40.70 0.72   123.97  
08/16 40.78 0.72   124.69  
09/16 40.87 0.73   125.42  
10/16 40.95 0.73   126.15  
11/16 41.03 0.74   126.88  
12/16 41.12 0.74   127.62  
01/17 41.20 0.74   128.37  
02/17 41.28 0.75   129.12  
03/17 41.36 0.75   129.87  
04/17 41.45 0.76   130.63  
05/17 41.53 0.76   131.39  
06/17 41.61 0.77   132.16  
07/17 41.70 0.77   132.93  
08/17 41.78 0.78   133.70  
09/17 41.87 0.78   134.48  
10/17 41.95 0.78   135.27  
11/17 42.03 0.79   136.06  
12/17 42.12 0.79   136.85  
01/18 42.20 0.80   137.65  
02/18 42.28 0.80   138.45  
03/18 42.36 0.81   139.26  
04/18 42.45 0.81   140.07  
05/18 42.53 0.82   140.89  
06/18 42.61 0.82   141.71  
07/18 42.70 0.83   142.54  
08/18 42.78 0.83   143.37  
09/18 42.87 0.84   144.20  
10/18 42.95 0.84   145.05  
11/18 43.03 0.85   145.89  
12/18 43.12 0.85   146.74  
01/19 43.20 0.86   147.60  
02/19 43.28 0.86   148.46  
03/19 43.36 0.87   149.33  
04/19 43.45 0.87   150.20  
05/19 43.53 0.88   151.07  
06/19 43.61 0.88   151.95  
07/19 43.70 0.89   152.84  
08/19 43.78 0.89   153.73  
09/19 43.87 0.90   154.63  
10/19 43.95 0.90   155.53  
11/19 44.03 0.91   156.44  
12/19 44.12 0.91   157.35  
01/20 44.20 0.92   158.27  
02/20 44.28 0.92   159.19  
03/20 44.36 0.93   160.12  
04/20 44.45 0.93   161.05  
05/20 44.53 0.94   161.99  
06/20 44.62 0.94   162.94  
07/20 44.70 0.95   163.89  
08/20 44.78 0.96   164.85  
09/20 44.87 0.96   165.81  
10/20 44.95 0.97   166.77  
11/20 45.04 0.97   167.75  
12/20 45.12 0.98   168.73  
01/21 45.20 0.98   169.71  
02/21 45.29 0.99   170.70  
03/21 45.36 1.00   171.70  
04/21 45.45 1.00   172.70  
05/21 45.53 1.01   173.70  
06/21 45.62 1.01   174.72  
07/21 45.70 1.02   175.74  
08/21 45.78 1.03   176.76  
09/21 45.87 1.03   177.79  
10/21 45.95 1.04   178.83  
11/21 46.04 1.04   179.87  
12/21 46.12 1.05   180.92  
01/22 46.20 1.06   181.98  
02/22 46.29 1.06   183.04  
03/22 46.36 1.07   184.11  
04/22 46.45 1.07   185.18  
05/22 46.53 1.08   186.26  
06/22 46.62 1.09   187.35  
07/22 46.70 1.09   188.44  
08/22 46.78 1.10   189.54  
09/22 46.87 1.11   190.65  
10/22 46.95 1.11   191.76  
11/22 47.04 1.12   192.88  
12/22 47.12 1.13   194.00  
01/23 47.20 1.13   195.13  
02/23 47.29 1.14   196.27  
03/23 47.36 1.14   197.42  
04/23 47.45 1.15   198.57  
05/23 47.53 1.16   199.73  
06/23 47.62 1.17   200.89  
07/23 47.70 1.17   202.06  
08/23 47.78 1.18   203.24  
09/23 47.87 1.19   204.43  
10/23 47.95 1.19   205.62  
11/23 48.04 1.20   206.82  
12/23 48.12 1.21   208.03  
01/24 48.20 1.21   209.24  
02/24 48.29 1.22   210.46  
03/24 48.37 1.23   211.69  
04/24 48.45 1.23   212.92  
05/24 48.53 1.24   214.16  
06/24 48.62 1.25   215.41  
07/24 48.70 1.26   216.67  
08/24 48.79 1.26   217.93  
09/24 48.87 1.27   219.21  
10/24 48.95 1.28   220.48  
11/24 49.04 1.29   221.77  
12/24 49.12 1.29   223.06  
01/25 49.21 1.30   224.37  
02/25 49.29 1.31   225.67  
03/25 49.37 1.32   226.99  
04/25 49.45 1.32   228.32  
05/25 49.53 1.33   229.65  
06/25 49.62 1.34   230.99  
07/25 49.70 1.35   232.33  
08/25 49.79 1.36   233.69  
09/25 49.87 1.36   235.05  
10/25 49.95 1.37   236.42  
11/25 50.04 1.38   237.80  
12/25 50.12 1.39   239.19  
01/26 50.21 1.40   240.59  
02/26 50.29 1.40   241.99  
03/26 50.37 1.41   243.40  
04/26 50.45 1.42   244.82  
05/26 50.53 1.43   246.25  
06/26 50.62 1.44   247.68  
07/26 50.70 1.44   249.13  
08/26 50.79 1.45   250.58  
09/26 50.87 1.46   252.04  
10/26 50.95 1.47   253.51  
11/26 51.04 1.48   254.99  
12/26 51.12 1.49   256.48  
01/27 51.21 1.50   257.98  
02/27 51.29 1.50   259.48  
03/27 51.37 1.51   261.00  
04/27 51.45 1.52   262.52  
05/27 51.53 1.53   264.05  
06/27 51.62 1.54   265.59  
07/27 51.70 1.55   267.14  
08/27 51.79 1.56   268.70  
09/27 51.87 1.57   270.26  
10/27 51.95 1.58   271.84  
11/27 52.04 1.59   273.43  
12/27 52.12 1.59   275.02  
01/28 52.21 1.60   276.63  
02/28 52.29 1.61   278.24  
03/28 52.37 1.62   279.86  
04/28 52.45 1.63   281.50  
05/28 52.54 1.64   283.14  
06/28 52.62 1.65   284.79  
07/28 52.70 1.66   286.45  
08/28 52.79 1.67   288.12  
09/28 52.87 1.68   289.80  
10/28 52.96 1.69   291.49  
11/28 53.04 1.70   293.19  
12/28 53.12 1.71   294.90  
01/29 53.21 1.72   296.62  
02/29 53.29 1.73   298.35  
03/29 53.37 1.74   300.09  
04/29 53.45 1.75   301.84  
05/29 53.54 1.76   303.61  
06/29 53.62 1.77   305.38  
07/29 53.70 1.78   307.16  
08/29 53.79 1.79   308.95  
09/29 53.87 1.80   310.75  
10/29 53.96 1.81   312.56  
11/29 54.04 1.82   314.39  
12/29 54.12 1.83   316.22  
01/30 54.21 1.84   318.07  
02/30 54.29 1.86   319.92  
03/30 54.37 1.87   321.79  
04/30 54.45 1.88   323.67  
05/30 54.54 1.89   325.55  
06/30 54.62 1.90   327.45  
07/30 54.70 1.91   329.36  
08/30 54.79 1.92   331.28  
09/30 54.87 1.93   333.22  
10/30 54.96 1.94   335.16  
11/30 55.04 1.96   337.12  
12/30 55.12 1.97   339.08  
01/31 55.21 1.98   341.06  
02/31 55.29 1.99   343.05  
03/31 55.37 2.00   345.05  
04/31 55.45 2.01   347.06  
05/31 55.54 2.02   349.09  
06/31 55.62 2.04   351.12  
07/31 55.70 2.05   353.17  
08/31 55.79 2.06   355.23  
09/31 55.87 2.07   357.30  
10/31 55.96 2.08   359.39  
11/31 56.04 2.10   361.49  
12/31 56.12 2.11   363.59  
01/32 56.21 2.12   365.71  
02/32 56.29 2.13   367.85  
03/32 56.37 2.15   369.99  
04/32 56.46 2.16   372.15  
05/32 56.54 2.17   374.32  
06/32 56.62 2.18   376.51  
07/32 56.71 2.20   378.70  
08/32 56.79 2.21   380.91  
09/32 56.88 2.22   383.13  
10/32 56.96 2.23   385.37  
11/32 57.04 2.25   387.62  
12/32 57.13 2.26   389.88  
01/33 57.21 2.27   392.15  
02/33 57.30 2.29   394.44  
03/33 57.37 2.30   396.74  
04/33 57.46 2.31   399.06  
05/33 57.54 2.33   401.38  
06/33 57.62 2.34   403.72  
07/33 57.71 2.36   406.08  
08/33 57.79 2.37   408.45  
09/33 57.88 2.38   410.83  
10/33 57.96 2.40   413.23  
11/33 58.04 2.41   415.64  
12/33 58.13 2.42   418.06  
01/34 58.21 2.44   420.50  
02/34 58.30 2.45   422.95  
03/34 58.37 2.47   425.42  
04/34 58.46 2.48   427.90  
05/34 58.54 2.50   430.40  
06/34 58.62 2.51   432.91  
07/34 58.71 2.53   435.43  
08/34 58.79 2.54   437.97  
09/34 58.88 2.55   440.53  
10/34 58.96 2.57   443.10  
11/34 59.04 2.58   445.68  
12/34 59.13 2.60   448.28  
01/35 59.21 2.61   450.90  
02/35 59.30 2.63   453.53  
03/35 59.37 2.65   456.17  
04/35 59.46 2.66   458.84  
05/35 59.54 2.68   461.51  
06/35 59.62 2.69   464.20  
07/35 59.71 2.71   466.91  
08/35 59.79 2.72   469.64  
09/35 59.88 2.74   472.38  
10/35 59.96 2.76   475.13  
11/35 60.04 2.77   477.90  
12/35 60.13 2.79   480.69  
01/36 60.21 2.80   483.49  
02/36 60.30 2.82   486.32  
03/36 60.38 2.84   489.15  
04/36 60.46 2.85   492.01  
05/36 60.54 2.87   494.88  
06/36 60.63 2.89   497.76  
07/36 60.71 2.90   500.67  
08/36 60.79 2.92   503.59  
09/36 60.88 2.94   506.52  
10/36 60.96 2.95   509.48  
11/36 61.05 2.97   512.45  
12/36 61.13 2.99   515.44  
01/37 61.21 3.01   518.45  
02/37 61.30 3.02   521.47  
03/37 61.38 3.04   524.51  
04/37 61.46 3.06   527.57  
05/37 61.54 3.08   530.65  
06/37 61.63 3.10   533.75  
07/37 61.71 3.11   536.86  
08/37 61.79 3.13   539.99  
09/37 61.88 3.15   543.14  
10/37 61.96 3.17   546.31  
11/37 62.05 3.19   549.50  
12/37 62.13 3.21   552.70  
01/38 62.21 3.22   555.93  
02/38 62.30 3.24   559.17  
03/38 62.38 3.26   562.43  
04/38 62.46 3.28   565.71  
05/38 62.54 3.30   569.01  
06/38 62.63 3.32   572.33  
07/38 62.71 3.34   575.67  
08/38 62.79 3.36   579.03  
09/38 62.88 3.38   582.40  
10/38 62.96 3.40   585.80  
11/38 63.05 3.42   589.22  
12/38 63.13 3.44   592.66  
01/39 63.21 3.46   596.11  
02/39 63.30 3.48   599.59  
03/39 63.38 3.50   603.09  
04/39 63.46 3.52   606.61  
05/39 63.54 3.54   610.14  
06/39 63.63 3.56   613.70  
07/39 63.71 3.58   617.28  
08/39 63.79 3.60   620.88  
09/39 63.88 3.62   624.51  
10/39 63.96 3.64   628.15  
11/39 64.05 3.66   631.81  
12/39 64.13 3.69   635.50  
01/40 64.21 3.71   639.21  
02/40 64.30 3.73   642.93  
03/40 64.38 3.75   646.69  
04/40 64.46 3.77   650.46  
05/40 64.55 3.79   654.25  
06/40 64.63 3.82   658.07  
07/40 64.71 3.84   661.91  
08/40 64.80 3.86   665.77  
09/40 64.88 3.88   669.65  
10/40 64.96 3.91   673.56  

 

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