The Coinflip Game!
Let's say instead of poker, you're playing the coinflip game. You have a really good coin that wins 60% of the time. This is where your edge comes from.
Your equity is 40k. 60% of the time, you will win your first flip and double up. 40% of the time you will lose your flip and be out.
Since your initial equity was 40k, your equity after the first flip (with undetermined results) will also be 40k. If you lose the flip, your equity is 0.
.4x+.6y = 40,000
x=0
.6y=40,000
y= 66,667
In this scenario, after your first flip, assuming you win, your equity is $66,667
Although this is not poker, the parallels to the given example should be obvious.
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