A lottery winner must decide between two methods of payment. Choice one is to receive a lump sum of $100,000,000. Choice two is to begin with one cent on day 1, four cents on day 2, 16 cents on day three, and so on until the end of 18 days. Which choice should the lottery winner select? And what is the amount?

Question

anonymous · Answer

Choice 1:
amount 100 000 000 
Choice 2:
amount: 0.01 (4)^(18-1)

Lottery winner should choose the second choice

anonymous · Answer

Oh I see, and the amount of choice 2 is 171,798,691.84?

matt101 · Answer

He should choose the second option. The second option quadruples the previous day's winnings. This happens 17 times over the 18 days, meaning he would get:

0.01*(4^17) ~ $171 798 692, which is more than the first option.

anonymous · Answer

check with a calculator

anonymous · Answer

Thank you so much!