CFA Society Cyprus’ Simon Kesterlian highlights compound interest with doubling-cent example

Nicosia, Cyprus. CFA Society Cyprus’ Simon Kesterlian outlined the case for compound interest using a comparison between taking €1 million immediately and starting with a cent that doubles daily for a month.

A comparison of two choices

Kesterlian posed a question often seen online: would a person rather have €1 million today, or a single cent that doubles every day for a month?

He presented two hypothetical choices: Dimitris takes €1 million immediately, while Sophia chooses a single cent that doubles every day for a month.

How the totals change over time

On Day 1, Dimitris has €1 million and Sophia has €0.01. On Day 2, Dimitris remains at €1 million while Sophia has €0.02.

By Day 5, Dimitris still has €1 million and Sophia has €0.16. On Day 10, Dimitris remains at €1 million while Sophia has €5.12.

By Day 20, Sophia has €5,242.88. On Day 25, her total rises to €167,772.16.

On Day 27, Sophia reaches €1,342,177.28 and overtakes Dimitris. By Day 30, Dimitris still has €1 million, while Sophia has €5,368,709.12.

Kesterlian’s conclusion

“This is the power of compound interest,” Kesterlian said.

Would you choose €1 million today or a cent that doubles every day for a month?