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One big winner of $340M in Oregon
- Thread starter mrrman
- Start date
moshquerade
No Lifer
if i had won i would've bought you all a :beer:
TheAdvocate
Platinum Member
What grade did you get in finance/accounting? I'm guessing it was below a C.
Shadowknight
Diamond Member
At least that way you don't have to worry about blowing the entire wad in a year on booze and hookers. Seriously, a LOT of these big winners wind up blowing through the whole thing and getting themselves into det, or, their spouse leaves them and gets all the cash in the divorce.
TheAdvocate
Platinum Member
It's the same issue as the person who oculdnt understand why the lump sum was only $110M - time value of Money aka interest.
For the lump sum to be better than the payout stream, you have to invest it and get a return better than the discount rate they are applying. I have no idea what they used but I'm guessing its close to prime (6.5%). Also factored in is your age - fromw hat i understand, the payment stream ends the day you die, so if you dont live long enough, you (and your heirs) don't get all the money. Couple that with the buying/leveraging power of having all that money up front, and you understand why people take the lump sum.
If I were only about 20 though, I might just take the payment stream, purely to enforce discipline. But that's just a personal opinion.
For the lump sum to be better than the payout stream, you have to invest it and get a return better than the discount rate they are applying. I have no idea what they used but I'm guessing its close to prime (6.5%). Also factored in is your age - fromw hat i understand, the payment stream ends the day you die, so if you dont live long enough, you (and your heirs) don't get all the money. Couple that with the buying/leveraging power of having all that money up front, and you understand why people take the lump sum.
If I were only about 20 though, I might just take the payment stream, purely to enforce discipline. But that's just a personal opinion.
conehead433
Diamond Member
The problem with the annuity is that most of the lotteries don't allow for anyone in your family to inherit or continue to receive the yearly payment if you die. You can do far better than the 7.8 million per year investing properly if you opt to take the lump sum payment.
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