An employee is offered two options: a fixed annual salary of $50,000, or $1 the first month, $2 the second month, $4 the next month, and so on (doubling each month). If the employee plans to work for two years, which option should he choose?
A)The fixed annual salary.
B)The salary that doubles each month.

Question

Quizplus · Accepted Answer

The salary that doubles each month will exceed the fixed annual salary of $50,000. Doubling each month for 24 months (2 years), the final month's salary alone would be $2^{23} (since the first month is $2^0 = 1), which is significantly larger than the annual fixed salary, not even counting the total of all the months leading up to the last month.

An Employee Is Offered Two Options: a Fixed Annual Salary