Problem:
A wealthy uncle
gave his nephew John this choice as he graduated from high
school: he could either have $500,000 or he could, over the
course of 30 days, have one penny on the first day and double
it every day after that taking the total amount on the 30th day.
Which should he choose?
Let’s find out
first what the total would be after the 30 days…
Day 1:
$0.01
Day 16:
$327.68
Day 2:
$0.02
Day 17: $655.36
Day 3:
$0.04
Day 18: $1310.72
Day 4:
$0.08
Day 19: $2621.44
Day 5:
$0.16
Day 20: $5242.88
Day 6:
$0.32
Day 21: $10,485.76
Day 7:
$0.64
Day 22: $20,971.52
Day 8:
$1.28
Day 23: $41,943.04
Day 9:
$2.56
Day 24: $83,886.08
Day 10:
$5.12
Day 25: $167,772.16
Day 11:
$10.24
Day 26: $335,544.32
Day 12:
$20.48
Day 27: $671,088.64
Day 13:
$40.96
Day 28: $1,342,177.20
Day 14:
$81.92
Day 29: $2,684,354.40
Day 15:
$163.84
Day 30: $5,368,708.80
As you can
see, by following the pattern of doubling the dollar
amount every day, by the 27th day,
the total amount has already passed the $500,000 mark.
In conclusion, John should then choose the
“doubling option” because on the 30th day
he would have $5,368,708.80.