Annuity vs lump sum
The annuity pays 30 graduated instalments that grow about 5% a year. Whether that beats the cash depends entirely on the return you would actually earn on the lump sum.
Verdict at 5%
Take the lump sum
- Lump sum after tax
- $57,095,200
- Annuity present value after tax
- $56,045,524
- Difference
- $1,049,676
- Break-even return rate
- 4.87%
- Total annuity paid out (gross)
- $214,000,000
Beat 4.87% after tax and inflation on the cash and the lump sum wins. Below that, the annuity is worth more.
Payment schedule
| Year | Gross payment | After tax | Present value |
|---|---|---|---|
| 1 | $3,221,007 | $1,868,184 | $1,868,184 |
| 2 | $3,382,057 | $1,961,593 | $1,868,184 |
| 3 | $3,551,160 | $2,059,673 | $1,868,184 |
| 4 | $3,728,718 | $2,162,657 | $1,868,184 |
| 5 | $3,915,154 | $2,270,789 | $1,868,184 |
| 6 | $4,110,912 | $2,384,329 | $1,868,184 |
| 7 | $4,316,458 | $2,503,545 | $1,868,184 |
| 8 | $4,532,280 | $2,628,723 | $1,868,184 |
| 9 | $4,758,894 | $2,760,159 | $1,868,184 |
| 10 | $4,996,839 | $2,898,167 | $1,868,184 |
| 11 | $5,246,681 | $3,043,075 | $1,868,184 |
| 12 | $5,509,015 | $3,195,229 | $1,868,184 |
| 13 | $5,784,466 | $3,354,990 | $1,868,184 |
| 14 | $6,073,689 | $3,522,740 | $1,868,184 |
| 15 | $6,377,374 | $3,698,877 | $1,868,184 |
| 16 | $6,696,242 | $3,883,821 | $1,868,184 |
| 17 | $7,031,055 | $4,078,012 | $1,868,184 |
| 18 | $7,382,607 | $4,281,912 | $1,868,184 |
| 19 | $7,751,738 | $4,496,008 | $1,868,184 |
| 20 | $8,139,325 | $4,720,808 | $1,868,184 |
| 21 | $8,546,291 | $4,956,849 | $1,868,184 |
| 22 | $8,973,605 | $5,204,691 | $1,868,184 |
| 23 | $9,422,286 | $5,464,926 | $1,868,184 |
| 24 | $9,893,400 | $5,738,172 | $1,868,184 |
| 25 | $10,388,070 | $6,025,081 | $1,868,184 |
| 26 | $10,907,473 | $6,326,335 | $1,868,184 |
| 27 | $11,452,847 | $6,642,651 | $1,868,184 |
| 28 | $12,025,489 | $6,974,784 | $1,868,184 |
| 29 | $12,626,764 | $7,323,523 | $1,868,184 |
| 30 | $13,258,102 | $7,689,699 | $1,868,184 |