DES MOINES, Iowa — Another day, another billion dollar lotto prize.
At least, that’s how it appears ahead of Tuesday night’s Mega Millions illustration for an approximated $1.05 billion top reward.
It’s a big amount of cash, however such huge prizes have endupbeing far more typical, with 5 rewards topping $1 billion consideringthat 2021 — and one prize reaching $2.04 billion in 2022.
The enormous rewards are due in part to possibility, however it’s not all happenstance. Rising interest rates paired with modifications to the chances of winning are likewise huge factors the rewards grow so big.
HOW DO INTEREST RATES INCREASE JACKPOTS?
Nearly all prize winners choose for a swelling amount payment, which for Tuesday night’s drawing would be an approximated $527.9 million. The swelling amount is the money that a winner has really won. The highlighted $1.05 billion reward is for a sole winner who is paid through an annuity, which is moneyed by that swelling amount and will be doled out eachyear over 30 years.
That’s where the greater interest rate endsupbeing a aspect, duetothefactthat the greater the interest rate, the bigger the annuity can grow over 3 years. The U.S. is in the middle of a exceptional run of interest rate increases, with the Federal Reserve raising a secret rate 11 times in 17 months, and that greater rate makesitpossiblefor a approximately $500 million swelling amount reward to be marketed as a prize of about twotimes that size.
HOW DOES THE ANNUITY WORK?
A winner who picks the annuity choice would get an preliminary payment and then 29 yearly payments that increase by 5% each year. Opting for an annuity has some tax advanta