MegaMillions

CFAcountry Wrote:
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> How long can you wait before the ticket is no
> good?
I think it’s a year. I don’t have personal experience though :(
 
Each winning ticket gets a $190MM 26 year annuity or a lump payment of $81MM. Who would take the cash and who would take the annuity ($7.3 MM per year)?
 
Assuming the PV calculation is fair, I would take the annuity. I don’t need $81 million at once. However, there is a chance that sudden great wealth will turn me into a cocaine snorting irresponsible playboy with a propensity to destroy even the most dynastic of fortunes. So, it’s better to have the income distributed over many years.
 
^ yea but you’re forgetting the TVM, and the potential returns you can make with the 81MM cash…
I’d take cash, and LIVE IT UP!!
 
iteracom Wrote:
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>
That’s why I stated the assumption of a fair discount rate. If someone took the time to calculate a fair discount rate, then the conclusion might be different. In any case, I am not that ambitious. Barring some sort of hyperinflation scenario, $7 million a year for 26 years is enough for me to not care about earning even a bit more than that. Maybe other people will be different.
 
ohai Wrote:
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> Assuming the PV calculation is fair, I would take
> the annuity. I don’t need $81 million at once.
> However, there is a chance that sudden great
> wealth will turn me into a cocaine snorting
> irresponsible playboy with a propensity to destroy
> even the most dynastic of fortunes. So, it’s
> better to have the income distributed over many
> years.
You want to let the government hang on to your money?? It’s bad enough waiting on a tax refund. Forget that. They’re probably using an egregious discount rate to screw you on the PV calc.
 
I calc’d the IRR @ 7.7%. Not terrible for having to do absolutely nothing but sit back and enjoy!
 
With 81 million, you can write your will and donate money after your death but with 7mm if you die, they will stop making payment.
I would take lumpsum anyday
 
BValGuy Wrote:
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> I calc’d the IRR @ 7.7%. Not terrible for having
> to do absolutely nothing but sit back and enjoy!
I think you get the first payment on day 1, so IRR is closer to 8.7%. A return of 8.7% (or even 7.7%) for doing nothing is pretty hard to beat. I’m sure some of the ballers on here can generate double digit returns every year for 25 years, but I think I’d have to go with the annuity.
I would think any remaining payments due after your death would go to your estate.
 
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