|Posted: May 10, 2003, 8:16 am - IP Logged|
I've posted about this subject before. Don't look at it that way - the cash value is not determined based on the annuity value, it's the other way around. In this case, they determine how much cash is necessary in order to generate an annuity jackpot of $10 million. The fact that the cash value is less indicates that the returns on the bonds (or whatever they purchase) is higher. Less cash is necessary to generate the $10 million 30-payment jackpot.
That is also why games with a shorter annuity period (e.g., Mega Millions with 26 payments) tend to have higher cash values. There are fewer years to generate interest accumulation, which means more cash is necessary to generate the same annuity value. If Powerball and Mega Millions each have the exact same annuity-value jackpot, the Mega Millions cash value will always be higher.