Quote:
Originally posted by ur my bitch:
not true. They are willing to pay the full amount quoted, just over time. Everybody knows that, so it is not a trick.
They trick is at what rate are they adjusting the time value of money? Are they using inflation? prime? Libor? Fed Funds? The key to see if you are getting fucked is the discont rate. Compare it to the actual rate of inflation and if the discount rate is higher, than you are fucked.
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The problem is they use no adjustment - so it is a trick. And both you and I know that poor people playing the lottery don't fully understand "discount rates." If you "Win 20 million" they pay you 1 million dollars per year for 20 years. Well my handy dandy little calculator tells me that at 7 percent (a reasonable rate) that annuity is only worth $10.59M hardly the $20M that the lottery players are expecting.