I haven't replayed my tape yet, but did anyone else notice something in the credits about the $1,000,000 prize being payable over some enormous timespan like a 20 or 40 year period of time???

I know they do that with big lottery jackpots, but come on, to do that with a measily $1,000,000 TV show prize is pathetic! What's that value in actual 2003 dollars -- $400k?

-SB

• Saw it too,sleeeve, 05:23 PM, 06-11-03
• RE: For Love Or Money prize payable over 20 years??,SurvivinDawg, 08:01 PM, 06-11-03
  • RE: For Love Or Money prize payable over 20 years??,katem, 08:06 PM, 06-11-03
• RE: For Love Or Money prize payable over 20 years??,okdebi, 08:27 PM, 06-11-03
  • RE: For Love Or Money prize payable over 20 years??,Drive My Car, 08:34 PM, 06-11-03
• Spoiler?,sleeeve, 01:45 PM, 06-17-03
  • RE: Spoiler?,SurvivorBlows, 09:51 AM, 06-24-03
    • RE: Spoiler?,SurvivinDawg, 12:21 PM, 06-24-03
      • RE: Spoiler?,SurvivorBlows, 12:56 PM, 06-24-03
        • RE: Spoiler?,SurvivinDawg, 06:23 AM, 06-25-03
          • Present value,AyaK, 07:11 PM, 06-26-03
• RE: For Love Or Money prize payable over 20 years??,AZ_Leo, 10:33 AM, 06-24-03
• RE: For Love Or Money prize payable over 20 years??,SurvivorBlows, 10:15 AM, 07-08-03
  • RE: For Love Or Money prize payable over 20 years??,PackMan, 11:02 AM, 07-08-03
  • RE: For Love Or Money prize payable over 20 years??,SurvivinDawg, 11:11 AM, 07-08-03
• Bumping...,cqvenus, 02:12 PM, 07-08-03
  • RE: Bumping...,SurvivorBlows, 02:29 PM, 07-08-03
• Chicago Sun-Times says lump sum was $465k,SurvivorBlows, 06:55 PM, 07-14-03
  • So...,AyaK, 07:23 PM, 07-14-03
• Disclosure Statement From First Episode of FLOM2,PackMan, 01:01 AM, 07-15-03
  • RE: Disclosure Statement From First Episode of FLOM2,SurvivinDawg, 06:25 AM, 07-15-03

I saw that at the end of the episode, too, Webby. They can take it over 20 years, or as a lump sum at the current value of the $$$.

Basically, they aren't getting a million, and they aren't getting much of a man, either.

Another great show, NBC... keep up the good work </sarcasm>

Yes I saw that. I posted about it on one of these thresds around here.

I think it was a 40 year annuity, also.

Contradictions don't exist. If you are faced with a contradiction, check your premises. You will find that one of them is wrong. -- Ayn Rand, Atlas Shrugged

>Yes I saw that. I
>posted about it on one
>of these thresds around here.
>
>
>I think it was a 40
>year annuity, also.

This is what I saw as well.

Hey this is still better than just getting Rob

(c) 2002, 03 GeorgiaBelle Creations, Inc. All rights reserved

Even if its only $400,000..what great justice though! Perfect ending..Rob thinks the girl is head over heels in love, she takes the money and runs AFTER telling him he's a cad and now Rob is out of work and penniless and still looking for someone to take his boots off. I'm actually almost feeling sorry for him, almost being the emphasized word in that sentence. I mean, the guy must have SOME redeeming qualities..has anyone seen even one?? And catching the grapes in his mouth doesn't count!!

I mean, the guy must have SOME redeeming qualities..has anyone seen even one??

Nope, I haven't seen any. He is icky, all there is too it. He can't carry on a simple conversation, and that wimpy mambly pambly voice of his makes me cringe.

I think NBC was looking for Evan, but failed.

Welcome okdebi! Nice to have you with us. Reality TV World has lots of great forums, hope you check them all out, and have fun here.

Buggy

I've been thinking more about this... would the producers include the fact that the $1 million was paid out over 40 years if someone didn't take the $$$ and run? It seems like if someone took Rob that they might as well just let us all think that the woman could have gotten $1 million in one lump sum.

...just a thought.

LAST EDITED ON 06-24-03 AT 09:52 AM (EST)

The fact that the money is paid over 40 years is pathetic -- and clearly the women haven't been told this (my guess is that this is the show's final zinger, after they are forced to choose the money or Rob -- which should be an easy choice for any of them.)

40 years is just really insane... think about it, Kelly was talking about quitting her job and travelling -- on what, $25,000 (before taxes) a year??? Not to be morbid, but the winner might not even live another 40 years, someone like 30 year old Erin would be 70 years old when she finished collecting!

The actual present day value of this money must be next to nothing -- these type of calculations have never been my area, but I'd be surprised if it was over $100k (just reinvesting $25k today in savings bonds today would result in $1.6 million in 42 years.)

-SB

I would suspect that the girls must either take the 40 year annuity or could take a lump sum of considerably less value. It would be like most lotteries are set up.

Contradictions don't exist. If you are faced with a contradiction, check your premises. You will find that one of them is wrong. -- Ayn Rand, Atlas Shrugged

Of course, I'm assuming the same.

What I was trying to say is that the "lump sum" is probably a mere fraction of the million -- from the numbers I've seen in the past when lottery winners have opted to take the lump sum of a 20 payment, the lump sum figure has always seemed to be less than half the initial figure.

Based on that, I'd assume that $250k would be the absolute max of lump sum of a 40 year payment, but given that I doubt the math is that simple, and it's probably not a linear relationship, I wouldn't be surprised to hear that the lump sum payment for a 40 year prize is probably closer to 10 cents on the dollar than 25 cents.

-SB

I'd suspect even less than $250K as the initial startup. I'm being too lazy to figure out the math, but with 40 years of interest building, one could start out with a pretty small amount.

Contradictions don't exist. If you are faced with a contradiction, check your premises. You will find that one of them is wrong. -- Ayn Rand, Atlas Shrugged

Since I don't watch this show, I'll let someone who saw where it said that this was $1 million over 40 years post this as a news story.

The present value of an annuity depends upon three factors: the amount of money per payment, the length of time, and the prevailing interest rate used for discounting. For example, right now a 5% rate would probably be the maximum fair discount rate, because you certainly can't expect your money to earn more than 5% per year in a risk-free investment in the current environment.

So ... if the producers are really going to pay out $1 million over 40 years, that means $25K per year. If the first $25K is paid out at once, then it's worth $25K (no discounting). The remaining 39 payments must be discounted at, say, 5%.

The formula for calculating the present value of an annuity is
PVA = a0 + a (1-(1+r)**(-n))/r,

or, in words and filling in the values:
the present value equals the amount of the annual payment paid in time zero (the $25,000 paid out now) plus the following quantity: take 1 minus the calculated value of 1.05 to the negative 39th power, then divide it by .05 (the interest rate), and finally multiply that by the amount of the annual payment each year for the next 39 years.

PVA = $25,000 + $25,000 (1-(1.05**-39))/.05;
PVA = $25,000 + $25,000 (1-0.1491479)/.05;
PVA = $25,000 + $25,000 (.8508520)/.05
PVA = $25,000 + $25,000 (17.01704)
PVA = $25,000 + $425,426
PVA = $450,426

Which makes the total present value of the annuity equal to ... $450,426 AT A 5% DISCOUNT RATE. However, if a higher interest rate is used, then the value of the annuity is less -- dramatically so. For example, if an 8% discount rate were used, then the annuity would only be worth $321,965 -- chopping almost $130K off the lump sum. State lotteries have generally used a discount rate around 8%.

We'll see how cheap NBC is by what interest rate they use.

Another tidbit (but hardly surprising) I saw in the credits is that they admit the producers are "consulted" in the eliminations. I don't remember the exact wording.

LAST EDITED ON 07-08-03 AT 11:05 AM (EST)

Someone in the "mainstream" press finally caught onto this:

http://www.nypost.com/entertainment/2327.htm

$800k lump sum seems extremely high to me... no clue what math the person they are speaking with utilized to arrive at that figure

$800k lump sum seems extremely high to me... no clue what matyh the person they are speaking to used to arrive at that figure

All I can say is if NBC offers the 800K, take it! It would equate to about a 1.2% discount rate. More likely they would offer around 320K. NBC has already proven they'll cheap out, so why would you expect them to apply a lower discount rate? As Ayak stated above, state lotteries tend to apply an 8% discount rate (but they also pay it out over 20 to 25 years). I wouldn't be surprised to see NBC apply 10%, which would bring the present value to just under 270K.

Ms. PackMan loved this show. I found that my time was better spent finishing the latest Harry Potter book

NO way the lump sum is $800,000, especially over 40 years.

That was either a typo, or they got their numbers backward and it should be 1,000,000 - 800,000, or 200,000. That might make more sense.

Contradictions don't exist. If you are faced with a contradiction, check your premises. You will find that one of them is wrong. -- Ayn Rand, Atlas Shrugged

"The prize, which totals $1,000,000, is payable in a financial annuity based over 40 years, or the contestant may choose to receive the present cash value of the foregoing annuity," the credits read.

Full Story

I'm bumping this because there is confusion about the money story. Yes, they can take the piddly $25K/yr. OR, they can take the lump sum, which the NYP estimated to be worth $800K (given current interest rates).

So, in the words of Dubya, "Make no mistake"

This girl Erin is a *total* DAW, and now she's going to lose it -ALL- as a result.

~ cq

i can't wait til she's rejected for a cool mil (give/take) by some dumb jackass