Posted on March 11, 2010.
A person Lottery over the lump sum or annual payments? $ 232 million winner won 88.5 million U.S. dollars in a lump sum .. more, less or even 20 or 25 years??
No, DanFish - the nominal value is not the same.
If you have a choice between $ 232 million or an amount of $ 88.5 million lump sum, you get a total of 232 million dollars over 20 years you will have a total of $ 88.5 million at present. They are not the same face value.
However, they are relatively the same in a practical point of view. Say you take in $ 23 million per year (which, incidentally, you do not count the taxes are levied on millet 232.) Now $ 23 million, not bad, but the 20th year, 23 million dollars could be a year of wages for many people.
I agree with DanFish when he said that, in your investing 88.5 million U.S. dollars you could potentially do more in the long term. Still - this is not the same nominal value. 232 million is 232 million euros. 88.5 million is 88.5 million.
I would opt for the lump sum and invest.
read the book Money For Nothing by Edward AROW ..... is a fascinating read about the psychological impact of winning big by ordinary people and pre-2000, when states have not lump sums. I'm halfway through and it's a very interesting read so far ... Flag
Well the nominal value of money is the same set, but the inflation time (or less likely, deflation) would take its toll and at the end of a period of 20 or 25 years, the money would be worth less. It is also the risk that the institution has promised the money would go bust in this period of 20 or 25 and be unable to pay.
With a lump sum, however, the winner would be able to invest in 25 years and have more money than the person who obtained annual installments.
Most groups now tend to offer their rates in annual or monthly installments as it puts less stress on their overall financial situation, and allows them to invest more money to make a larger profit while the winner is seated at home waiting for the next payment.
You may be interested to know the formulas used for converting lump sums in pension values, and vice versa. ("Pension" means annual payments) I have included in the links below.
Basically the reason why there is the lump sum is less than the amount of annual payment is because the lump sum (88.5 mill) East TN real money sitting in the lottery jackpot.
If you take the annuity option, the lottery money invested at a certain rate of return, so that over a period of 26 years, you get 232 mill. But you might as well invest the plant of 88.5 on your own. Some suck PPL to invest, so they do the lottery for them.
Hope that makes sense
(Ps you to be part of the win!)
