Wow. You just one the 800 million dollar lottery. You have the option of taking 500 million as one lump sum or 25.8 million today then 25.8 million for the next 30 years. What is the discount rate that that makes taking either option equivalent? Shoot! We need to pay taxes. Assume the tax rate is 40 percent for all payments. How does this change the above? Now, on top of the taxes above consider the fact that any money you make on you investments every year will also be taxed at 40 percent. What rate of return will you need after taxes to make both options equivalent? What is the discount rate pretax you will need