Answer Part :
Initially the king guessed a sack full of rice would be enough, but soon he saw the sack was empty and not even the 35% of the board had been traversed. So the king thought to call a mathematician to estimate the quantity of rice needed.
After two long days of calculations, the math wizard came with his estimate and said “Your highness, the quantity of rice that man is asking for is several times more than we can even buy after selling all of our assets.”
He showed his calculation to king and said, “The total number of grains at the end of 64th square will be 263(for the first block it will be 20). So the total number of grains needed is.”
In other words, if we assume 1 grain of rice equals to 20 Milligram, he is asking for 184,467,440,737,096 Kgs or 184 Billion sacks of rice containing 100 kg each !!!
This was to demonstrate the power of compounding with which the numbers can turn huge. Our Investments can grow huge too.
Lets see one more example below:
Suppose two friends make an investment of Rs: 10,000 each
|Name||Interest||After 30 years|
|10% pa compounding||Rs: 17,449||—-|
|Deepak||20% pa compounding||Rs: 23,73,763|
Both the friends made an equal amount of investment for 30 years, but at a different rate. At the time of maturity, the difference in the redeemed amount was magnificent. It is because of the power of compounding, which made an initial amount of 10,000 turns 237 times huge in 30 years.
We can do wonders with our portfolio, but it is only possible when we form a right strategy, remain consistent, and keep a constant watch on our portfolio.