Powerball Jackpot....

56 mill cash,the color green is my favorite lol.

Well take the 90 mill,its never going to get spent anyways because to spend 90 mill takes longer then 30 years.

I don't think you really need to worry about it.

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I would only need a few million initially to roll around naked in.

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I was one number away from the Jackpot in 2006.

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man i bet that was an emotional roller coaster

Ya it was crazy cause I had 34 and the number that came up was 43. I picked the powerball number but I let the computer pick the other 5 numbers. I usually play 10 numbers like all the 20s, 30s, etc. It worked that day but never since.

Looking at the numbers, I agree with foshizzle. However, most lottery winners are white trash and end up broke and/or in jail within five years, so maybe the annuity is the better option. If you win and plan on changing your name and leaving the country, take the lump sum. If you're going to stick around and be inundated by all your "friends" and long lost relatives for money, take the annuity.

I thought you could elect to take the full jackpot over 30 years or a 50% cash payment immediately. Whatever, the analysis you need to perform is on an after tax basis what is the discount rate that makes the present value of the annuity stream equal to the lump sum payment, and can you resonably get a better rate of return from investing than that discount rate.

Assuming no change in tax rates over the life of the annuity, you'd get $3,000,000 annually on which you would pay 35% federal income tax, or $1,050,000 of tax, leaving you $1,950,000 of after tax cash. The lump sum payment would give you $36,400,000 of after tax cash (65% X $56,000,000). According to my calculation using the Rate function from Excel, you would need to earn an after tax 3.67% rate of return for the lump sum payment to equal the annuity stream.

The problem with the above analysis is that it assumes you invest 100% of you prize winnings which is unlikely. The analysis also does not take into account how much money you want to have accumulated/remaining at the end of the 30 year period or the amount of money you would like to have to live off of during the period. Each of those makes the computations a little more complicated. You will have to do your own calculations to account for the additional variables.

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most lottery winners are white trash and end up broke and/or in jail within five years

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There was some documentary following the lives of lottery winners several years later, and that generally turned out to be the case. I personally knew someone who got about a $10MM insurance settlement (car crash, and it made her paraplegic for life, the payment was legit). Within five years she had donated most of it to her church and various family members who spent a lot more time visiting than they ever had before. Sad.

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That's assuming the tax rate doesn't go up over the next 30 years. I'd rather take the lump sum at 35% tax rate now.

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I fully expect the tax rates to go up. However, I don't know how large or how frequent those changes mught be. My point was to demonstrate how small a rate of return you would need to earn to make the lump sum worth more than the annuity. And any changes in tax laws that reduce the cash flow payments during the annuity period only make the lumps sum payment more attractive.