View Lump Sum Or Annuity Lottery
Images. Each payment is 5 percent larger than the. Here's which one to choose if you win the lottery.
If I Win The Lottery Should I Ask For A Lump Sum Or An Annuity from cdn.slidesharecdn.com
Most lotteries offer the option of getting the cash in one lump sum, or having it paid out to you over a number of years. While a lump sum payment will ensure that you have immediate access to your winnings, this option will actually pay out less than a lottery annuity due to if you choose the extended payout, the state takes the present cash value of the jackpot and buys an annuity or bonds that will generate interest. To fund the lottery, the lottery operators buy a zero coupon bond, which is a type of bond.
As we figured out before the lottery, it really only makes sense to play provided that you take the annuity, according to the expected value.
In most cases when you win the lottery you are presented with two options on how to receive your lottery prize. Let's take the record $656 million mega millions jackpot of 2012, for example. Just throw it in a bank like normal? Alternatively, you can take the lump sum cash value.
