Your decision is actually based on your risk tolerance. If you are risk averse and would prefer to invest the proceeds of either the lump sum payment today or the annuity in a less risky investment (such as a portfolio of bonds and low risk stocks that would earn a return of less than 8.92%), then you should choose the annuity. If you are a risk taker and plan to invest all of the funds in stocks and expect an annual return greater than 8.92%, then you would want to take the lump sum today. If you disagree with this assessment or would like to learn more, please contact me at mike@itutorfinance.com or set up an appointment on this site! Thanks for your participation. (The 8.92% is the rate used to discount the $250,000 annuity due to today that would exactly equal $2.5 million)