FIN 200 Week 8 DQ 1 - 7617

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·         Review the Time Value of Money simulation. Which option did you initially choose, cash or annuity? How were your winnings affected by the cash option? How did this compare to the annuity option? If you won the lottery today, which option would you choose and why?

 

 

Under time value of money simulation, the option between cash or annuity is evaluated on the criteria of short term benefits with strategic (long-term) benefits. Cash option is opted when somebody is looking for quick returns & results. Annuity options are for people looking for slow & steady returns.

 

A large factor comes down to the age of the person. Taking an annuity at 80 makes no sense. Take the cash, spend it fast. If you are consumer-oriented, take the annuity so that you can learn to live comfortably within your means and maybe stay out of trouble on an annual basis, and know that you can do so for years to come. Some players do believe that Rather than spending the time listing all of the possible investments and returns, that getting a check every year for the next 30 would be very comforting.

 

For me annuity payout is actually an incredible handicap to one's "buying power".

 

Although my winnings were very much affected by cash option which would be sometime dramatically very high & sometimes it's the other way round .You could get one that will give you an annual payment until you die, which might be "better" than one that stops paying when you're 50, or you might get one that pays modestly for the first few years and then pays more after you've gotten better at handling larger sums of money.

 

If you won the lottery today, which option would you choose and why?

 

If I won a lottery today after all the merits & demerits of annuity I would still prefer cash option because I am risk bearer, I want immediate returns so that I could reinvest them & earn more.. I am somebody with business-mind and know how to or are experienced at taking healthy risks for gain, take the lump sum.

 

Solution Description

·         Review the Time Value of Money simulation. Which option did you initially choose, cash or annuity? How were your winnings affected by the cash option? How did this compare to the annuity option? If you won the lottery today, which option would you choose and why?

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