A Thought on The Record Powerball Jackpot ...

[A HERETIC I AM]

34. It was no trouble, but I must admit I could be totally wrong!

One fact that may shed a bit more understanding on the math;

Currently, the cash option is about 65% of the stated jackpot. It has reset to $40mil and the cash option is stated at $26.2 mil.

Back in 2006 when the yield on the 30 year Treasury Bond was 5%, the stated cash option amounts were always less than 50% of the jackpot, closer to 40%. The reason it is so much higher now is because, as I said earlier, they buy an annuity primarily using Treasuries. The present yield on the 30 year is around 2.75% - very low by historical standards. The effect that has is there is less interest paid to the annuity during its life and therefore they need more money to start with to pay out a specific amount.