Farm CPA Today! » Farm CPA Today! http://www.farmcpatoday.com A blog for farmers & others involved in the agricultural industry. Tue, 07 Feb 2012 23:55:36 +0000 en hourly 1 http://wordpress.org/?v=3.3 The Mustard Seed http://www.farmcpatoday.com/2009/01/20/the-mustard-seed/ http://www.farmcpatoday.com/2009/01/20/the-mustard-seed/#comments Tue, 20 Jan 2009 20:02:53 +0000 Paul Neiffer http://www.farmcpatoday.com/?p=30 rape-and-cottonwoodI have given many financial seminars where I start out with the story of two employees.. Each employee is giving the option of receiving $1,000 per day in wages for 28 days or starting with a penny and having their wage double each day.

Most people assume the $1,000 per day will be a much higher number, but lets review the numbers

  • After week one, employee # 1 have $7,000 in wages, employee # 2 will have a $1.27
  • At the end of week 2, employee # 1 is up to $14,000 in total wages, employee # 2 has $163.83
  • After three weeks, the two employees are almost equal. # 1 has $21,000, # 2 has $20,971.51
  • At the end, employee # 1 has earned $28,000. Not bad wages for a less than a month. However, # 2 has earned a total of $2,684,354.55.

Like the mustard seed that starts as a very small seed and grows into a large plant at maturity, the power of interest compounding starts small and over time becomes very powerful.

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