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Tuesday, February 12, 2008

The Enterprising Art Dealer

A London art dealer purchased a painting for £60,000 and hung it in her gallery. Many people liked the painting very much and she was able to sell it in a few weeks' time for £70,000. The very next day after the painting was delivered, another customer inquired about the painting and claimed they would be willing to pay £90,000 for it if it were still for sale. The art dealer borrowed £10,000 from her partner and bought the painting back from the original customer for £80,000 and was then able to sell it to the second customer for the £90,000 that had been agreed upon.

How much profit did the art dealer make in her transactions?


Bon said...

£10,000 from the first sale. The act of buying it back and selling it a second time netted her no profit.

ericanpro said...

No, It must be £20,000 ! The first step was an investment of £60,000 to get the painting. Forget the partner who lent him £10,000 and got them back in the end ... that's just a small distraction. The art dealer finally gets £90,000 for the painting leaving him £20,000 of profit for himself and £10,000 for the first customer who gave the painting back.

meg said...

^She's female.

Here is what her bank record would look like( if she had no money left but no debt either):

-60,000 (for buying it)

+10,000 (for selling it)

+20,000 ( for BORROWING 10,000)

-60,000 ( for buying it back)

+30,000 ( for selling it)

+20,000 ( for giving back the money she'd borrowed)

I thought it was 10,000 but as I just proved, It's 20,000. :)

Anonymous said...

2,000 is correct.

Let's say she started with 6000.

6000 - 6000 = 0 (Purchase BY Dealer)
0 + 7000 = 7000 (Purchase FROM Dealer)
7000 + 1000 = 8000 (Borrow)
8000 - 8000 = 0 (Purchase BY Dealer)
0 + 9000 = 9000 (Purchase FROM Dealer)
9000 - 6000 = 3000 (Profit WITH Loan)
... and Finally subtract the loan.
3000 - 1000 - 2000