## What Is An Annuity:

In a personal finance context, an Annuity is often discussed when spreading out a lump sum payment (e.g. lottery winnings, insurance payouts, etc.). An Annuity is a constant stream of money that is assumed to be invested at a fixed rate,

See below.

Present value of annuity = Cash payment * (1-(1+rate of return)^(-periods))/rate of return

= 10,000 * (1+1.08^(-10))/0.08

=$182,899.19 The present value of the winnings is$182,899.19.