What core financial principle explains the difference between a lottery’s advertised annuity jackpot and its immediate lump-sum cash value?

💡 Explanation:

The difference between an annuity (a stream of payments over time) and an immediate lump-sum payout is governed by the Time Value of Money. The lump-sum cash value is the discounted Present Value of the future annuity payments, accounting for the interest that the money could earn over the payment period.