$1.$You win $$100$ in a basketball pool. You have a choice between spending the money now or

putting it away for a year in a bank account that pays $5$ percent interest. What is the opportunity cost of spending the $$100$ now?

$2.$ The company that you manage has invest $$5$ million in developing a new product, but the

development is not quite finished. At a recent meeting, your salespeople report that the intro

duction of competing products has reduced the expected sales of your new product to $$3$ million. If it would cost $$1$ million to finish development and make the product, should you go ahead and do so$?$ What is the most that you should pay to complete development?