Earlier this yr, a Tennessee warehouse employee named John Robinson received one-third of a $1.6 billion Powerball jackpot. His share was $533 million. He had a alternative between taking the $533 million in 30 equal annual funds of $17.77 million or an instantaneous lump sum of $328 million. John selected the lump sum. What low cost price did he apply in deciding to take the lump sum cost? Put in another way, what rate of interest would an individual should earn on $328 million to have the ability to extract $17.77 million at finish of the yr for 30 years (and don’t have anything left on the finish of that point interval)?
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