Counterintuitive financial decisions

How often do you let your feelings and intuition guide you in making a financial decision? Let’s say you have to make one, do you pull out your calculator right away and start crunching numbers?

Here is an interesting brain twister that may open your eyes on how counterintuitive finance (and math for that matter) can be. Thanks to Golbguru at Money, Matter, and More Musings for blowing dust off of this old old puzzle (I adjusted the numbers to reflect inflation ;-) )

You have to choose between two job offers:

1) Your starting salary is $100,000 annually, you get a $10,000 raise at the end of each year
2) Your starting salary is $50,000 semi-annually, you get a $3000 raise at the end of every 6 months.

Rack your brains and tell me which offer pays more. And don’t spoil all the fun by Googling up the answer!

Warning! Mild addiction is reported. Certain individuals are known to have spent hours cracking the case. ;-)

See also:

2 Responses to “Counterintuitive financial decisions”

  1. 1 Golbguru Jan 26th, 2007 at 5:35 am

    Ah…please don’t trap me into this again :).

    It’s nice to see you excited about this problem.

  2. 2 Yan Jan 26th, 2007 at 11:28 am

    “Excited” is not the right word! I lost all my sleep (trying to figure out why the result is the way it is) that night when I found the puzzle on your blog!

Leave a Reply