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Monday, June 02, 2008

The Power Of Compounding


The Power Of Compounding.

Legend has it that one of the ancient emperors of China fell in love with a new game called "Chess." The emperor decided to reward the game's creator.

He summoned the inventor to the royal palace and announced to the court that the inventor would be granted one wish.

"I am honored, Your Highness," the inventor muttered humbly. "My wish is that you grant me one grain of rice" "Just one grain of rice?" the startled emperor asked. "Well just one grain of rice for the first square of the chess board," the inventor said. "Then doubled to two grains for the second square...four grains for the third square....and so on until the single grain has been doubled for the entire chess board. That is my simple wish."

The emperor was well pleased. "I have been given such a wonderful game at such a cheap price." he thought to himself. "My ancestors have smiled upon me today." "It is done!" the emperor cried.

"Bring out the chess board and let everyone here witness our agreement." The court gathered around the chess board.

A kitchen servant produced a one pound bag of rice and handed it to the inventor, who smiled as he opened the bag. "I suggest you return to the kitchen for a larger bag," the inventor said to the servant.

The court laughed loudly, mistaking his comment for sarcasm. Then the inventor began placing the grains of rice on the board, doubling the number of grains as he went.

The onlookers laughed and nudged each other as the first row of eight squares was filled....1....2....4....8....16....32....128 grains of rice. But the giggles soon gave way to gasps by the middle of the second row, for small piles of rice soon doubled to medium-sized bags of rice...which doubled again to big bags of rice.By the end of the second row, the emperor knew he had made a huge mistake. The grains owed to the inventor totalled to 32,768 - and there were still 48 squares remaining!.

The emperor stopped the game and called in the lands wisest mathematicians. They tossed the beads of their abacuses and made hasty markings on slate boards. After much fussing, the mathematicians reached a unanimous conclusion: A grain of rice doubled for every square on the 64-square chess board would calculate to 18 million trillion grains of rice - a quantity equal to all the rice in the world multiplied by 10!.

Excerpt from the book 'The Parable Of The Pipeline' by Burke Hedges.

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