Question
Issue #1 Over the weekend I won the $1,000,000 Illinois Final Four lottery. I visited the Lottery office this morning and they informed me the
Issue #1
Over the weekend I won the $1,000,000 Illinois "Final Four" lottery. I visited the Lottery office this
morning and they informed me the million dollars is to be paid $50,000 per year for 20 years. I really
want my money "now" since I am afraid the State of Illinois might need to file bankruptcy. The lottery
office spokesperson informed me I could have the money "now" but she needed to use a money factor
of 5%. In passing, she also indicated that she misses the good old days of Blago. I am starting to think
she might cheat me.
Question:
What should I expect in a "lump sum" payment before taxes if I get paid "now"?
Issue #2:
My granddaughter, who is in kindergarten, informed my wife her favorite class is "recess". My wife has
concluded she probably will not be receiving an academic scholarship for recess, thus she wants to save
money for her college education. Her financial planner suggested she use a money factor of 5%.
What does my wife need to invest
today
so she has $50,000 available for college in 15 years?
What would she need to
invest each year
, if she wants an alternative, to a lump sum initial deposit.
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