An iterative average of the numbers 1, 2, 3, 4, and 5 is computed the following way. Arrange the five numbers in some order. Find the mean of the first two numbers, then find the mean of that with the third number, then the mean of that with the fourth number, and finally the mean of that with the fifth number. What is the difference between the largest and smallest possible values that can be obtained using this procedure?
$\textbf{(A)}\ \frac{31}{16}\qquad\textbf{(B)}\ 2\qquad\textbf{(C)}\ \frac{17}{8}\qquad\textbf{(D)}\ 3\qquad\textbf{(E)}\ \frac{65}{16}$
The iterative average of any 5 integers $a,b,c,d,e$ is defined as:
\[\frac{\frac{\frac{\frac{a+b} 2+c} 2+d} 2+e} 2=\frac{a+b+2c+4d+8e}{16}\]

Plugging in $1,2,3,4,5$ for $a,b,c,d,e$, we see that in order to maximize the fraction,
$a=1,b=2,c=3,d=4,e=5$,
and in order to minimize the fraction,
$a=5,b=4,c=3,d=2,e=1$.
After plugging in these values and finding the positive difference of the two fractions, we arrive with $\frac{34}{16} \Rightarrow \frac{17}{8}$, which is our answer of $\boxed{\textbf{(C)}}$