Table of Contents
- 1 Would you prefer to have $1 million cash right now or a penny that doubles every day for 30 days?
- 2 Would you rather be given one million dollars right now or be given one penny today and each day be given double what you were given the day before for thirty days?
- 3 Why do people prefer to have money now rather than later?
- 4 What is the 365 penny Challenge?
Would you prefer to have $1 million cash right now or a penny that doubles every day for 30 days?
Now that you’ve read the fable, you can see the choice is pretty clear: it’s better to have a single penny that doubles everyday for a month, versus $1 million up front. This is because of the power of compound interest. If you took a single penny and doubled it everyday, by day 30, you would have $5,368,709.12.
Would you rather be given one million dollars right now or be given one penny today and each day be given double what you were given the day before for thirty days?
On the 30th day it would be worth an astounding $5,368,709! If the penny were to be allowed to double for another 30 days, the penny would grow to over $5 quadrillion (five thousand trillion!) dollars.
Why do individuals prefer a peso today than receive a peso a year from now?
So, simply because prices of most things tend to increase over time, and 1,000 pesos, most probably, will be able to buy more gasoline or chicken or beer today than one year from now, a peso today is worth more than a peso tomorrow.
Why do people prefer to receive 1$ today than in a year’s time?
Investors prefer to receive money today rather than the same amount of money in the future because a sum of money, once invested, grows over time. Over time, the interest is added to the principal, earning more interest.
Why do people prefer to have money now rather than later?
Individuals generally prefer possession of a given amount of cash now rather than the same at some future time is known as ‘Time Preference for Money’. There are varied reasons for time preference for money. (a) Availability of better investment opportunities. (b) Due to Risk and uncertainty of Cash flows.
What is the 365 penny Challenge?
The 365 day penny challenge (or penny-a-day challenge) makes saving money easier and more manageable by having people deposit a small amount of money every day into a savings account or small jar. Basically, you start by depositing one penny into your savings on the first day of the challenge.