and one that offers an exercise in logic. I find it interesting that no one has obviously taken any probability or statistics classes. This is a very basic problem involving assessing a present value of an annuity. Simply calculate the present value of a 50,000/year 20 year annunity using an interest rate 'you' would expect to get investing your $400k in another investment and see which is higher. I have put away my Stats calculator from that class I took years ago, but its a simple calculation. cheers.
Exactly. I'd say more of an elementary Finance / Investment 101 problem than anything from probability or statistics. Quick and easy to do on a HP 12C, or similar. Or just google "NPV calculator"... there are a ton of them online.
There is a reason the commercials like JG Wentworth only offer 22%. If you put 400K into tax free municipal bonds, you can get roughly 5% or 20K per year risk free. If you make a reasonable income, you are going to have to pay 40% of that 50K a year in taxes. Why would anyone pay 400K for the ticket? You'd have to be stupid.
WE use spreadsheets nowadays for those calcs....makes it even easier and you change the assumptions and instantly see the results, time to catch up old timer! As to the original poster, 400k is alot of money for that settlement, give the payout is over twenty years.
Austin, Why not buy the ticket yourself? In your videos you always talk about how much money you have and are making. You had a video from two weeks ago where you talk about how your money allows you to help others out. Well, help your friend out... Remember, Charity Begins at Home. If it is such a great deal, why not take it yourself???????? "There's a Sucker Born Every Minute" -- P. T. Barnum
You apparently didn't read all the previous postings. I already said that the proposed 400K for a net return of 30K a year wouldn't even give you the return banks have on their mortgage loans. With a demanded interest rate of 5% the NPV is 392,559.63 $. With a demanded interest rate of 10% the NPV is 280,947.60 $. With a demanded interest rate of 15% the NPV is 215,946.94 $.
We can all see that you'd be better off NOT buying the annuity if you can make 5% or more elsewhere with your 400k. The only question I have is this: How do I put some money on this being a joke and just someone goofing around on ET? Since I can't get a bet on the Colts today, I guess this is the next best thing! Anyone here wanna take the Pats and 3pts? I am serious. I'd love to see the Pats win, but I don't think they will beat Payton Manning at home. In fact, I'd be willing to give the 3 pts. PM me if you are interested in the bet. cheers.
the online calculators do not seem that simple to use. some limit you to a 5 year period etc. any suggestions for a site with a npv calculator which is relatively easy to use?
<i>"Austin, Why not buy the ticket yourself?"</i> Welcome to ET, <b>fooled</b>. Why would you assume I'm interested in a fixed-income instrument? I prefer to invest in raw land / timber, if you're curious. IMO, that will give me a desirable ROR over the course of time, and I get enjoyment from use of property along the way. Also, where did I say anything about good or bad deals? Where did I say the owner of this ticket is a good friend? He is an accquaintance I'd call a friend, but we don't know each other very well. Back to the facts: someone I know owns an annuity he'd like to sell. I posted this thread in case someone here is interested in parking cash within a fixed rate, guaranteed instrument. All the varied rabbit trails like borrowing money to purchase it (?) or whether it makes sense at $400k, less, etc is beyond me. It's highly possible the owner of this ticket will settle for something over $300k. If that makes sense for someone's fiscal goals, great. If not, no harm done. Right? To the four PM's asking for further info, I will put you in contact with the ticket owner tomorrow (Monday). Thank you for the level of interest, and I hope it works out for all parties involved. Best Wishes