5 people get together and decide to have a party. Each of those 5 people, tell 5 other people about the party. And each of those people who have been told about the party by these 5 people, tell another 5 people about the party. How many people know about the party?
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First 5 people already know about the party as they are the ones who decided it. Each of them tells 5 other people. So, in all, they tell 5 × 5 = 2 5 people. Now, each of these 25 people, tells 5 other people about the party. So, in all, they tell 2 5 × 5 = 1 2 5 people. So, 5 people knew about the party, they told 25 others about it and these 25 people in turn told 125 others about the party. Therefore, a total of 5 + 2 5 + 1 2 5 = 1 5 5 people know about the party.