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If you sell a lottery annuity payment worth 100000 early what can you expect to get?
Wiki User
∙ 14y ago
A good starting point is the present value of the annuity, see related link for the formula.
You need to know how many years the annuity is good for, and estimate an interest rate. This is generally the interest rate someone could get for the money elsewhere, for example on government bonds. (Since buying your annuity would tie up the money for years, the interest rate for long term papers is the most relevant.)
If we assume a 20-year annuity, 5,000/year and 5% interest, the total payout from the annuity is 100,000 and the present value is ~62,000.
You would probably need to sell it for less than present value to make it a better alternative than bonds. How much less depends on the buyer. As an example, if the buyer wants 2% extra interest for the trouble, you can plug in 7% in the formula and get a current value of 52,970.
See the link for the formula and calculate for your own numbers.
Wiki User
∙ 14y ago
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