While it is usually a frivolous (if fun) exercise to think too much about the lottery, it does illustrate the mechanics of an annuity (a form of insurance or investment entitling the investor to a series of annual sums.). To answer the following questions, visit the Powerball website (Powerball.com) for this week and use information in your book, and information available from the web.
What are the current jackpot (paid in 30 equal annual payments) and the cash payout value?
Assuming you could invest the entire cash payout at a guaranteed, insured rate of 2% a year, what would your annual return total?
Which option would you take? Explain your choice.