David N. Goliath is planning to open a sporting goods store. However, the initial investment is $120,000. He currently has this money in a certificate of deposit earning 10 percent. He may leave it there if he decides not to open the store
If he opens the store and it is successful he will generate a profit of $50,000. If it is not successful, he will lose $90,000. What would the probability of a successful store have to be for David to prefer this to investing in a CD?
p(50,000 ) - (1 - p)(90,000 ) > 0.10(120,000 ), therefore p > 0.7286
Business
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Income from operations for Division Z is $150,000, total service department charges are $400,000 and operating expenses are $2,266,000. What are the revenues for Division Z?
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