What other factors, in addition to tax and spending habit considerations, should govern your decision?

• You’ve just won the Powerball Jackpot and are pondering taking a lump sum vs. an annuity.  What other factors, in addition to tax and spending habit considerations, should govern your decision?
• There’s an old proverb that states “a bird in the hand is worth two in the bush.” How can this be applied to the Time Value

Sample Solution

Of Money in considering a lump sum vs annuity decision?

The proverb can be applied to the lump sum vs annuity decision by suggesting that taking a lump sum payment gives you immediate control over the funds and the ability to invest it however you choose. An annuity, on the other hand, provides a guaranteed stream of income over time but with less control over the funds. The decision should also consider investment opportunities and growth, inflation, and life expectancy, and overall financial stability and security.