/biz/ - Business & Finance

>>8691101
>>8692165
1 - blue line - $5m earning 2% interest compounded annually
2 - purple line - $200,000 annually, no interest
3 - brown line - $200,000 annually, the previous sum earning 2% interest compounded annually
> formula from https://math.stackexchange.com/questions/118616/continually-compounded-interest-addition-to-principal

Looks like if you are earning 2% annually from your investments, $200k annually will beat out $5m in 35 years.
If you are earning 5% annually from your investments, the 200k annually won't beat the $5m lump sum.
I tried 3% and the blue and brown lines intersect at 45 years. At 4%, they don't intersect.

So basically take the lump sum if you know you can earn at least 4% annually.