1. An annuity offers $1,000 for 10 years. If you can earn 12 percent annually on your funds, what is the maximum amount you should pay for this annuity?

2. If you invest $5000 in a certificate of deposit that matures after ten years and pays 5% interest, which is compounded annually until the CD matures. How much interest will you earn if the interest left to accumulate? How much interest will you earn if the interest is withdrawn every year?

3. You short-sell 200 shares of Tuckerton Trading Co., now selling for $50 per share. What is your maximum possible loss?