Congratulations! You won the lottery! You now have the choice of taking a one-time lump sum payment of $40 million today, or receiving 20 annual payments of $2.5 million (beginning today and ending 19 years in the future). What is the present value of the annuity with discount rate of 5%? But sadly, studies show that between 44% and 90% of those winning the lottery and taking the lump sum go broke or declare bankruptcy within 5 years. While the lump sum is typically always larger than the present value of the annuity, it might nevertheless be in a person's better interest to take the annuity.