A man decides to buy a nice horse. He pays $600 for it and he is very content with this strong animal. After a year the value of the horse has increased to $700 and he decides to sell the horse. But a few days later he regrets his decision so he buys back the horse again. Unfortunately he has to pay $800 to get it back so he loses $100. After another year of owning the horse he finally decides to sell the horse for $900. What is the overall profit the man makes?
The man makes an overall profit of $200.
The man always sold the horse for a $100 profit every time.
Assume that he had $1000 in the beginning. After buying the horse for $600 and then selling it off for $700, he would have: $1000 – $600 – $700 = $1100.
After buying the horse for $800 and then selling it off for $900, he would have: $1100 – $800 + $900