Question

If you currently have $1 in the bank and person A pays you 5% interest compounded annually while person B guarantees that on the nth day after today you will have n^10 dollars. For example, on day 1 you will have $1 and day 2 you will have $1024. Do you accept person B's offer? Why or why not? You need to set up a limit, compute it and explain how the result explains what you should choose.

Answer 1

I will choose option A and it's obvious. Accordingly to the person B he will give n^10 $ . After one year from today he will give me 365^10$, which is greater then the GDP of a developed country. So its impossible and he can't pay such a big big amount.and when n tends to infinity it goes to infinity. So by the limit value I will choose option A because after one year he will give me 1.05$ according to compound internet with given rate. A man average age is 65 year ..so from my birth to my age of 65 person A will give me 1.05^65 $ which is a payable money. So I will choose person A offer