Compounding Your Investment
You and a friend, Farmer Frank, have inherited neighboring apple orchards. What fun! But now you have some tough decisions to make. While both orchards have just one tree, there’s plenty of land for growth. The good news is that these trees produce an impossibly delicious apple — but just one piece of fruit per year! The bad news: If you want to grow another tree, you have to plant a full apple — your entire harvest! — to get an additional tree the next year. Still, you’re committed to re-planting early on so that you can grow your orchard. You forego an apple in the first year and then eat just one apple per year after that. Meanwhile, Frank’s having a hard time resisting his annual tasty treat when it’s ripe — he eats his one apple every year. Click the next and previous arrows below to move through time and see how those decisions play out over 10 years.