Confused!! There's a speedboat that cost $45,000. I borrow 25,000 from a friend....

UsbPort18

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Trying to figure this out, A friend just went in on his own.
The equation goes
There's a speedboat that cost $45,000.
I borrow 25,000 from a friend.
Another 25,000 from another friend.
That's 50,000.
I have 5000 left.
Another friend asks for a 3000 loan.
That's 2000 left over.
I pay back the two loans 1000 each, which brings the initial loan back to 24000 each.
That's 48000. Ok
Now the question is if the friend pays me back the 3000 how it turns bact to 51000?? Where did the 1000 come from? Or is there an error I'm not seeing? Any thoughts?
 
Trying to figure this out, A friend just went in on his own.
The equation goes
There's a speedboat that cost $45,000.
I borrow 25,000 from a friend.
Another 25,000 from another friend.
That's 50,000.
I have 5000 left.
Another friend asks for a 3000 loan.
That's 2000 left over.
I pay back the two loans 1000 each, which brings the initial loan back to 24000 each.
That's 48000. Ok
Now the question is if the friend pays me back the 3000 how it turns bact to 51000?? Where did the 1000 come from? Or is there an error I'm not seeing? Any thoughts?
Assuming this is not a joke, this is just an illusion, a deception.

You are adding 3000 and 48000 to get 51000. Why? What does that number represent? Not your cash. Not your indebtedness. It is a meaningless number.

Step 1. You borrow 25000 from two very trusting rich friends. Your debt increased by 50000 so it now equals d + 50000, where d was all your other debt. Your cash also increased by 50000 so now it equals
c + 50000, where c was the cash in your wallet, etc. Cash and debt are different things. They never necessarily must be equal and seldom are equal in fact. The deception is started here because this particular transaction, which increases cash and debt by an equal amount, may create the illusion that total cash and total debt are necessarily equal.

Step 2. You buy the boat for 45000. This has no effect on debt but decreases cash by 45000. What does your cash equal now? Obviously c + 50000 - 45000 = c + 5000. But your debt stays the same at
d + 50000.

Step 3. You lend 3000 to a third poor friend. This changes your cash again to
c + 5000 - 3000 = c + 2000, but it does not affect your debt, which stays at d + 50000.

Step 4. You pay 1000 back to each of your two rich friends. This is another transaction in which the change in cash and the change in debt are equal and so reinforces the deception that total cash and total debt are equal, but this is not necessarily so.
Cash now equals c + 2000 - 2000 = c, just where you started.
Indebtedness now equals d + 50000 - 2000 = d + 48000.

Step 5. Your poor friend pays back 3000. That increases your cash to c + 3000. But it has no effect on your indebtedness, which remains at d + 48000. There is no reason to add
3000 to d + 48000.

Now you may wonder what you finally got in return for an increase in debt of 48000. You got an increase in cash of 3000 and a boat costing 45000. Oh my
45000 + 3000 = 48000. You were bamboozled into adding 3000 to the wrong number. Do not take up finance as a career.
 
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