Author Topic: [Update] - Someone won Powerball tonight... (Read 3060 times)

PC · « **Topic Start:** January 10, 2016, 03:17:46 AM »

Jackpot could reach $1.3B (that "B" isn't a typo) for the next drawing.

mitlen · « **Reply #1:** January 10, 2016, 09:49:01 AM »

Quote from: PC on January 10, 2016, 03:17:46 AM

Jackpot could reach $1.3B (that "B" isn't a typo) for the next drawing.

I used to spend that in a weekend. On Monday morning, I'd have a few rolled up dollar bills from Good Guys.

1995hoo · « **Reply #2:** January 10, 2016, 11:15:41 AM »

Heh. To get a sense for how big the jackpot is:

Most of us cannot relate to even a million dollars, but we all have no problem having a sense for how much a thousand dollars is and how far it goes (or does not go, in today's world).

If someone gave you $1 million and required you to spend it all at exactly $1000 a day until it's gone (assume there are no taxes involved at any step, and assume 365 days in a year), it would take you two years and 270 days to spend it all (2.74 years).

If instead someone gave you $1 billion subject to the same rules (and the same 365-day assumption), it would take you around 2740 years to spend it all. (The effect of leap years over the course of 2700 years would shorten the period somewhat, but not by a huge amount.) For $1.3 billion it'd take around 3562 years.

(Now, to get a sense for the US government's annual budget, if someone gave you $1 trillion subject to the same rules, it'd take closer to 2,740,000 years.)

BrandonK · « **Reply #3:** January 10, 2016, 11:44:30 AM »

WNFF pool, gents? We can buy a portion of the team!

JCA-CrystalCity · « **Reply #4:** January 10, 2016, 12:04:13 PM »

Quote from: BrandonK on January 10, 2016, 11:44:30 AM

WNFF pool, gents? We can buy a portion of the team!

and sign Prince Fielder.

Slateman · « **Reply #5:** January 10, 2016, 01:46:13 PM »

Quote from: 1995hoo on January 10, 2016, 11:15:41 AM

Heh. To get a sense for how big the jackpot is:

Most of us cannot relate to even a million dollars, but we all have no problem having a sense for how much a thousand dollars is and how far it goes (or does not go, in today's world).

If someone gave you $1 million and required you to spend it all at exactly $1000 a day until it's gone (assume there are no taxes involved at any step, and assume 365 days in a year), it would take you two years and 270 days to spend it all (2.74 years).

If instead someone gave you $1 billion subject to the same rules (and the same 365-day assumption), it would take you around 2740 years to spend it all. (The effect of leap years over the course of 2700 years would shorten the period somewhat, but not by a huge amount.) For $1.3 billion it'd take around 3562 years.

(Now, to get a sense for the US government's annual budget, if someone gave you $1 trillion subject to the same rules, it'd take closer to 2,740,000 years.)

Challenge accepted

GburgNatsFan · « **Reply #6:** January 10, 2016, 06:11:00 PM »

I'd have relations with a million dollars.

Quote from: 1995hoo on January 10, 2016, 11:15:41 AM

Heh. To get a sense for how big the jackpot is:

Most of us cannot relate to even a million dollars, but we all have no problem having a sense for how much a thousand dollars is and how far it goes (or does not go, in today's world).

If someone gave you $1 million and required you to spend it all at exactly $1000 a day until it's gone (assume there are no taxes involved at any step, and assume 365 days in a year), it would take you two years and 270 days to spend it all (2.74 years).

If instead someone gave you $1 billion subject to the same rules (and the same 365-day assumption), it would take you around 2740 years to spend it all. (The effect of leap years over the course of 2700 years would shorten the period somewhat, but not by a huge amount.) For $1.3 billion it'd take around 3562 years.

(Now, to get a sense for the US government's annual budget, if someone gave you $1 trillion subject to the same rules, it'd take closer to 2,740,000 years.)

PC · « **Reply #7:** January 11, 2016, 01:49:48 PM »

Jackpot $1.4B

JCA-CrystalCity · « **Reply #8:** January 11, 2016, 02:17:03 PM »

What is the discount rate for the upfront payment instead of the annuity? The discount on 1.3BB knocks it back to 800MM or so. That has to be a high discount rate.

Shouldn't anyone with a life expectancy > or = to the payout period take the annuity? If it is 20 years, that is still $65MM a year. Ought not to be cash strapped. Do they give you smaller payments up front to make the annuity less attractive?

Slateman · « **Reply #9:** January 11, 2016, 02:21:48 PM »

Quote from: JCA-CrystalCity on January 11, 2016, 02:17:03 PM

What is the discount rate for the upfront payment instead of the annuity? The discount on 1.3BB knocks it back to 800MM or so. That has to be a high discount rate.

Shouldn't anyone with a life expectancy > or = to the payout period take the annuity? If it is 20 years, that is still $65MM a year. Ought not to be cash strapped. Do they give you smaller payments up front to make the annuity less attractive?

https://www.usamega.com/powerball-jackpot.asp

The payout is 868 million. After taxes you're looking at ~ 600 million
At 1.3 billion, the annual payout is like 45 million and it'll take a year to do it. You're leaving around 250-300 million on the table by taking the payout.

There are a couple reasons to take the payout

1. What if they go under and they can't pay you out over the next 30 years?
2. They can change the tax rules at any time and these annual payments will be ripe for targeting.

JCA-CrystalCity · « **Reply #10:** January 11, 2016, 02:31:21 PM »

30 years. So I'm in my late 50s. Closer question. Maybe I buy Tom and Giselle's place and pay it off on a 30 year mortgage?

Slateman · « **Reply #11:** January 11, 2016, 02:33:48 PM »

Quote from: JCA-CrystalCity on January 11, 2016, 02:31:21 PM

30 years. So I'm in my late 50s. Closer question. Maybe I buy Tom and Giselle's place and pay it off on a 30 year mortgage?

I think a better question is could you make more money than that in 30 years if you got the lump sum?

houston-nat · « **Reply #12:** January 11, 2016, 02:41:41 PM »

I haven't seen this anywhere, but how do they invest the dough for the annuity? At least in theory, it might be a smarter investment to take the payout and invest it prudently, if Powerball was planning to put it all into, say, buying student loan debt.

mitlen · « **Reply #13:** January 11, 2016, 02:50:24 PM »

Ya gotta be sheetin' me. I'm gonna pull down $868,000,000.00 and I'm gonna spend one minute thinking about how to invest it? Nope. I'll pay my niece (accountant) and have her handle it ... she can hire the lawyer too. She can forward the decisions to Belize.

JCA-CrystalCity · « **Reply #14:** January 11, 2016, 02:53:59 PM »

Quote from: houston-nat on January 11, 2016, 02:41:41 PM

I haven't seen this anywhere, but how do they invest the dough for the annuity? At least in theory, it might be a smarter investment to take the payout and invest it prudently, if Powerball was planning to put it all into, say, buying student loan debt.

hmmm. It almost seems fair, if I did this right. 868MM is the estimated cashout, the 30 year payout is $1.4B. That impute to about a 1.6% interest rate, if I used this calculator correctly.
http://www.moneychimp.com/calculator/discount_rate_calculator.htm

edit - payouts aren't even, they increase, so it isn't an annuity. I'm guessing the payout is closer to the rate on 30 year treasuries, if those are still issued.

HalfSmokes · « **Reply #15:** January 11, 2016, 03:01:54 PM »

Quote from: houston-nat on January 11, 2016, 02:41:41 PM

I haven't seen this anywhere, but how do they invest the dough for the annuity? At least in theory, it might be a smarter investment to take the payout and invest it prudently, if Powerball was planning to put it all into, say, buying student loan debt.

who knows how they do it, but I'm guessing that Wellington or Wellesley will beat it based on nothing more than lower fees

houston-nat · « **Reply #16:** January 12, 2016, 11:59:32 AM »

PC · « **Reply #17:** January 12, 2016, 12:57:26 PM »

Jackpot now up to $1.5B. That's a $938M cash value.

PC · « **Reply #18:** January 12, 2016, 02:30:43 PM »

http://espn.go.com/nhl/story/_/id/14555657/alex-ovechkin-washington-capitals-carmelo-anthony-new-york-knicks-take-chances-powerball

dracnal · « **Reply #19:** January 12, 2016, 02:53:41 PM »

That says the odds of winning are 1 in 292.2 million. That's roughly the number of seconds in nine years, three months. Which means if you knew a person was going to die in that time, buying a lottery ticket is like saying 'I bet he will die at 9:32AM on the 21st of June, 2022.'

BrandonK · « **Reply #20:** January 12, 2016, 03:31:59 PM »

Yeah, but someone will win eventually. ~75% of all possible combinations sold last pull. Estimated that 80+% will sell. Just crazy that one wasn't pulled.

Individual odds -- yup, pretty impossible.

Ali the Baseball Cat · « **Reply #21:** January 12, 2016, 03:51:33 PM »

If this keeps going on the CBO is going to need to revise some forecasts.

imref · « **Reply #22:** January 12, 2016, 10:36:34 PM »

my son mentioned you could buy every permutation for about $535 million.

Slateman · « **Reply #23:** January 13, 2016, 06:11:07 AM »

Quote from: imref on January 12, 2016, 10:36:34 PM

my son mentioned you could buy every permutation for about $535 million.

Yep. However, the only way that pays out is if you are the sole winner. If one other person wins, you cut it in half. After taxes, you probably don't have enough to cover what you spent on tickets.

1995hoo · « **Reply #24:** January 13, 2016, 07:39:53 AM »

Quote from: Slateman on January 13, 2016, 06:11:07 AM

Yep. However, the only way that pays out is if you are the sole winner. If one other person wins, you cut it in half. After taxes, you probably don't have enough to cover what you spent on tickets.

Not to mention the practical problem of how long it would take to enter all those numbers and print all those tickets.