The little meme showing a cow and four transactions has sparked plenty of curiosity: “I bought a cow for $800, sold it for $1000, bought it again for $1100, and sold it again for $1300. How much did I earn?” Let’s break down the math behind this classic profit‑calculation riddle and turn it into a short, readable article.
### The Step‑by‑Step Calculation
1. First trade:
– Buy for $800.
– Sell for $1000.
– Profit = $1000 – $800 = $200.
2. Second trade:
– Buy again for $1100.
– Sell again for $1300.
– Profit = $1300 – $1100 = $200.
3. Total earnings:
– Add the two profits → $200 + $200 = $400.
### An Alternative Viewpoint
Some people look at the overall cash flow:
– Total money spent = $800 + $1100 = $1900.
– Total money received = $1000 + $1300 = $2300.
– Net profit = $2300 – $1900 = $400.
Both methods confirm the same result: the total earnings from the two buy‑sell cycles are $400.
### Why This Puzzle Tricks the Mind
The riddle feels confusing because the second purchase price ($1100) is higher than the first sale price ($1000), making it seem like the overall profit should be less. The key insight is to treat each transaction pair separately; the profit on each cycle is independent of the previous one.
### Real‑World Takeaway
This simple example teaches a basic business principle: profit is the difference between selling price and cost price for each transaction. When you flip assets multiple times, calculate each cycle’s margin and sum them for the total gain.