Profit or Loss in Repeated Transactions: A Case Study With iMacs

Revisiting the classic problem of a girl buying and selling iMacs, we can explore the intricacies of profit and loss in financial transactions. This case study aims to clarify the underlying calculations and ensure a comprehensive understanding of the concept.

Introduction

The scenario in question goes as follows: A girl buys a used iMac for $700 and sells it for $800. She then buys a new iMac for $1200 and sells it for $1000. By the end of these transactions, is she making a profit or incurring a loss?

Calculating Total Profit and Loss

Let’s break down the transactions step-by-step:

First Transaction: Purchase Price: $700 Selling Price: $800 Profit: $800 - $700 $100 Second Transaction: Purchase Price: $1200 Selling Price: $1000 Loss: $1200 - $1000 $200

So, we need to consider both the profit and loss in these transactions:

Total money spent in purchasing $700 $1200 $1900

Total money received from selling $800 $1000 $1800

Net result Total money received - Total money spent $1800 - $1900 -$100

Therefore, she is left with a loss of $100.

Alternative Calculations

Here are a few alternative ways to look at the same transactions:

Initial Purchase: After purchasing the used iMac for $700, she sells it for $800, gaining $100. Second Purchase: She then buys a new iMac for $1200, incurring a loss of $100 (since she initially had $800, and now after losing $100 more, she has only $700 left). She then sells this new iMac for $1000, incurring an overall loss of $200.

In this scenario, she gains $100 from the first transaction but loses $200 from the second transaction, resulting in an overall loss of $100.

Conclusion

Through these step-by-step calculations, we can see that the girl incurs a loss of $100 in these transactions. This careful analysis ensures that no steps are missed and the net result is accurately determined.

When dealing with financial transactions, it is crucial to account for both gains and losses to arrive at the final outcome. This case study illustrates the importance of meticulous record-keeping and careful analysis in financial matters.