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Author: anthonyswift Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5026  
Subject: Re: inquiries from a newbie.... Date: 2/1/2000 10:55 AM
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palson asked:

I have a question for all those that think that the Dow at 50,000 is impossible:

An old man is sitting at a chess board with the squares numbered from 1 to 64. He puts one PENNY on the first square and offers his grandson a choice: each year he will double the amount on each subsequent square and give him the money on that square, OR he will give him $10 million now. Which alternative should the grandson take?

palsan

P.S. Which alternative would you want?


I reckon that even if the son put the money under a mattress, he has more capital by taking the money, until year 30. If he invests the $10m at a modest return, he can push this out a few years more, plus he has the additional advantage of being able to enjoy some income during his youth and early years of married life, providing for his childrens' education, perhaps.

Taking into account a discount factor for the possibility that his father is the subject of a military coup, or has his will challenged in court by an angry second wife, becomes bankrupt by his rash promise (which he probably would before year 64) or just changes his mind, I think I'd be inclined to advise the child to take the bird in the hand .....
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