2 Basic Financial Questions You Need To Know

Today, we are going to test your knowledge of compound interest.  Unfortunately, compound interest and basic money concepts are not taught in high school.  Knowledge is definitely power and there are many people who don't want you to have knowledge.  They might prefer you to watch 34 hours of tv per week (as noted in www.nydailynews.com), so that you can do anything but learn basic financial concepts.  After all, if you are broke, you will depend on others for your entire life.  If they can keep you in the dark, you will never be competition for them.

For the first question, which of the following would you choose:

• Option A would be to take $1 on January 1st, $2 on January 2nd, $4 on January 3rd and continue taking double the amount each day until January 31st.
• Option B would be to take 1 million dollars on January 1st, 1 million dollars on January 2nd, 1 million dollars on January 3rd and continue until January 31st.

For the second question, which of the following would you choose:

• Option A would be to purchase a refrigerator for $1000 which would last 20 years.
• Option B would be to purchase the same refrigerator for $2000, where at the end of the 20 years, you could get your $2000 back.

Thanks for reading, post your answers and we will revisit and discuss in a later post.

This post was reposted from http://finlit.biz/retirement-2/2-basic-financial-questions-you-need-to-know/, originally written on January 24th, 2013.