Erin just won Lotto America, which will pay her $40 million over the next 20 years at a rate of $2 million a year. Is Erin $40 million richer today?

Even though Erin will eventually receive $40 million, she would not be considered that wealthy today. Income to be received in the future is discounted to determine its present value. Also, for purposes of determining Erin's wealth, we would need to consider current and future tax liability.