>>http://www.msnbc.msn.com/id/20530196/
>>This couple has won the lottery AGAIN!.
>>
>>The first time around they won 2.5 million. If they had invested it in a 5% interest
>>savings acount, they could be living of $125,000 a year. So, other than greed, why play again?
>
>I'm more interested in why, if they won 5 million, they are only getting 2.5 million. How come?


Because by default you receive the jackpot in a series of annual payments. You can opt to take a lump sum instead, which most people do. It all has to do with the time value of money.

The story of Indians selling the land that is now Manhattan to white settlers for $40 worth of trinkets has been widely told (although apocryphal, I suspect) and they have been widely mocked for it. However, I read that if they had taken that $40 and invested it at compound interest it would now be worth more than Manhattan.