1. What is an opportunity cost? How is this concept used in TVM analysis, and where is it shown on a time line? Is a single number used in all situations? Explain . Your bank account will be worth $55,000 which is $10,000 (1+i)*5. True or False. Explain.

2. Explain whether the following statement is true or false: $100 a year for 10 years is an annuity; but $100 in Year 1, $200 in Year 2, and $400 in Years 3 through 10 does not constitute an annuity. However, the second series contains an annuity The present value of the security is rounded to $1,289. True or False. Explain .

3. If a firm’s earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but the annual growth rate would be less than 10%. True or false? Explain. (Hint: If you aren’t sure, plug in some numbers and check it out.)