I bought a cow for $800 I Sold it for $1000 I bought it again for $1100 I Sold it again for $1300 How much did I earn
The Correct Answer and Explanation is:
Let’s break down the transactions step by step:
- Initial Purchase: You bought the cow for $800.
- First Sale: You sold it for $1,000. This means you made a profit of $1,000 – $800 = $200 on the first transaction.
- Second Purchase: You bought the cow again for $1,100.
- Second Sale: You sold it again for $1,300. This means you made a profit of $1,300 – $1,100 = $200 on the second transaction.
Total Earnings
Now, to calculate your total earnings, you add up the profits from both sales:
- First sale profit: $200
- Second sale profit: $200
- Total profit = $200 + $200 = $400
Detailed Explanation:
You conducted two cycles of buying and selling the cow. In both instances, you sold the cow for more than you bought it, thus making a profit each time.
- First Transaction: You bought the cow for $800 and sold it for $1,000. The difference between the selling price and the purchase price is $200, which represents your profit from the first transaction.
- Second Transaction: After selling the cow for $1,000, you bought it back for $1,100, which was higher than your first purchase price. However, you sold it for $1,300, which again resulted in a profit. The difference between $1,300 and $1,100 is also $200.
Both of these profits are independent of each other, and when combined, they result in a total earning of $400. This calculation highlights how buying low and selling high—whether it’s the same item or a different one—leads to financial gain. The key to determining your overall earnings is to focus on the profits from each sale and disregard the intermediate purchases.