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Someone offers you a summer job and offers you two pay rates: (1) $10 per hour for 40 hours per week for 30 days or (2) One cent on day 1, two cents and day two, four cents on day three and on (doubling each day) for 30 days. If you were trying to make as much money as possible in 30 days, which pay rate would you choose? What does this illustrate?

 Jan 30, 2017
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(1)  pays you ≈  $1600

 

(2) pays you   1( 1 - 2^30) / (1 - 2)  =  1073741823 cents =  $ 10,737,418.23

 

(2)   is obviously the choice

 

This illustrates the power of "compounding"......

 

 

cool cool cool

 Jan 30, 2017

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