Horse trade

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 already a few days later he regrets his decision to sell the beautiful horse, and he buys it 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?

Answer Below

Consider the trade-story as if it describes two separate trades, where:

In the first trade, the man buys something for $600 and sells it again for $700, so he makes a profit of $100.
In the second trade, the man buys something for $800 and sells it again for $900, so he makes again a profit of $100.

The man makes an overall profit of $100 + $100 = $200

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