What's better? $1.5 million lump sum or $100K per year for life?

[PBateman]

It depends on that rate at which you can invest the lump sum. If the rate is greater than 6.7%, you should take the lump sum. Otherwise, the time value of the perpetuity is greater.

That's the answer.

[SubJunk]

Yeah would take the 1.5mil and invest

[AGangsta]

time value of money. 1.5m now for sure. factor in inflation and you won't know if the 100k in 20 years is equivalent to 95k or 50k.

the ONLY valid reason that you would take 100k/yr is if you're absolutely horrible at managing money and would blow the 1.5m instantly. at least then you have some sort of income yearly and can't spend recklessly because you won't have the money to.

[DavidC193]

With compound interest at 7% yearly

1.5 million will be worth $4,138,547 after 15 years. After 30 years $11,418,382. 45 years $31,503,677. 60 years $86,919,640.25

100k a year compounded yearly at 7% would be $2,964,708 after 15 years. After 30 years $10,868,529. 45 years $32,675,421. 60 years $92,841,323.

If you save, it really wouldn't matter which option you took.

In the long run it pretty much comes out to around the same. In the real long run though, 100k/year is better.. but only if you live that long

$92,841,323 in 2072 has the same buying power as $10,902,083 in 2012. (Assuming 3.63% inflation rate)

/thread

[HeeeyYouGuuuys]

I'm 31 and a fixed income modeler. Been working in the investments field for 7 years. I would take the $100K / year.

It's NOT an easy decision, and which option is "correct" depends on so many personal factors. The only idiots in this thread are the ones who say things like "obviously it's decision X, lol at the idiots who think it's Y."

[WIKI18]

ITT people don't know how to use 'what if analysis'

ITT: Retards who can't comprehend anything but an answer in black and white.