Answer to Investment Question

In my previous post I asked, which was the better investment option between a choice of £1,000,000 in 30 days or 1 pence now that doubles every second for the next 30 days.

The correct answer is option (b). This might come as a surprise to some because the option to receive £1,000,000 in 30 days sounds like a good deal. However, when one takes into consideration the power of compounding, then the option (b)- 1 pence now that doubles every second for the next 30 days works out to around 1 billion pounds as opposed to the 1 million pounds!

If you are to look at this scenario without taking the power of compounding into account, 1 day has 86,400 seconds and 30 days has 2,592,000 seconds. So, if the 1 pence doubles every second, then in 1 day, the one pence will have doubled to some big sum while within 30 days the 1 pence will have grown to an astronomical sum! For those with a strong mathematical background you should be able to work out the exact amount of option (b)!!