Publisher's Clearing House - Essay Example

Publishers Clearing House Publishers Clearing House If I win the prize of $10 million, I would like to take the $8 million today instead of taking $500,000 per year for the next 20 year. This is mainly because of my disabilities and I do not know how much time I will have in future. 20 years is a lot of time which is why I would love to take it now. There are, however, some economic considerations that should be made before taking a decision. It is essential that we take into account present value of the 20 yearly payments of $500,000 in order to make a purely financial decision.

The present value of future 20 payments of $500,000 is $9.7 million today assuming an interest rate of 0.25 percent (which is the current interest rate). This is why from an economic point of view it is good to accept the $500,000 for the next 20 years than to take $8 million today.There are many non financial factors like personal needs and life expectancy which play a role in this. An old person who does not even have 20 years to live will find the $8million today more attractive than anything monthly payment for 20 years.

A person might also need money to invest in a business that is expected to great returns in a short period of time. All these are important factors that play a role in deciding about taking the money now or on a monthly basis. I would like to take the money now given my disabilities. I don’t want to leave my money for 20 years as I might not even have 20 years. I would love the money now so that I can enjoy myself and fulfill my needs.