1) Explain the difference among lump sum, annuity, annuity due, and perpetuity. You may use graphs to explain.

2) Christy Reed has been depositing $1,500 in her saving account every December since 2001. Her account earns 6% compounded annually. How much will she have in December of 2010?

3) Alex Bell has just retired from the telephone company. His total pension funds have an accumulated value of $200,000, and his life expectancy is 16 more years. His pension fund manager assumes he can earn a 12 percent return on his assets. What will be his yearly annuity for the next 16 years?

4) Tom Busby owes $20,000 now. A lender will carry the debt for four more years at 8 percent interest. That is, in this particular case, the amount owed will go up by 8 percent per year for four years. The lender then will require Busby to pay off the loan over 12 years at 11 percent interest. What will his annual payment be?