Profit and Loss
If I sold a bike to my friend for $100 and my friend sells it back to me for $80 and I sell it back to him for $90, how much total profit or loss have I made or incurred?
posted by Karthik Nagaraj at
5:34 PM
Wednesday, June 14, 2006
If I sold a bike to my friend for $100 and my friend sells it back to me for $80 and I sell it back to him for $90, how much total profit or loss have I made or incurred?
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9 Comments:
Bobach writes:
I have received $190 from my friend and I gave my friend $80, so my net profit/loss is $110 minus my original cost of the bicycle.
But you dont know the original cost of the bike - BUT very very good catch! So lets have more brainstorming...
if the bike itself costs $100, then the profit made is $10...
Kavya,
You only know the Selling price and not the price it was bought at.
We know about the loss incurred by my friend, which would be $30.
Doesn't get me anywhere close to the answer though..
We dont particularly care of the loss by the friend. We only want the total profit that I can make out of this deal. Think on the lines of how you can arrive at the profit by subtracting CostPrice from SellingPrice and then also check out what Bobach writes in his first comment. You might get some help
as bobach said..i'd make $110..since the bike was just with me..all the money goes into my pocket...tats my full profit..but ive lost my bike...
Bobach writes:
I agree with Dhruv in one sense. The value of the bike must be taken into account. I will modify my original statement to be minus the value of the bicycle rather than minus the original cost. After all, with depreciation due to my use and amortized costs, the value may be much less than the original cost.
Whatever this value is, the fact that there are 3 transactions leaves me with that value remaining to be considered. After the first 2 transactions, I clearly made a $20 profit because the value of the bicycle subtracts from the profit/loss of both those transactions. It's the 3rd transaction that leaves the value to be determined and still in the equation. If anyone would argue that the value of the bicycle is $0, that's okay, and the profit is $110.
Hmmm, looks like Bobach may be on the right track of reasoning. We do need to know the original cost at which the bike was bought or how much loss/profit was made on that in the first transaction. So we can have the following reasonings that can stand:
[1] Since the bike was bought back for 80 bucks and sold again for 90 bucks, clearly there a profit of 10 bucks
[2] Since the bike was sold for 100 bucks and bought back at 80 bucks - profit is 20 bucks
[3] Now after a profit of 20 bucks, the bike is sold for 10 bucks more than what it was bought for, so an additional profit of 10 bucks - profit made is 30 bucks.
And many more...
All these resaonings are good only to determine the partial profit made in this deal. We can never tell what the "Total Profit" is as we do not know how much was actually paid to biy the bike in the first place.
I would give credit to Bobach. good attempt everyone! Keep it up!
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