David NGoliath Is Planning to Open a Sporting Goods Store

question 92

Essay

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?

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Definitions:

Welfare

Welfare refers to government programs designed to support the well-being of its citizens, especially those in financial need.

Poverty Line

A defined level of income that is considered the minimum necessary to maintain a standard of living.

Losing Ground

A phrase indicating that a person, organization, or entity is falling behind in competition or losing advantage.

Antipoverty Spending

Antipoverty spending refers to government expenditures aimed at reducing poverty through direct aid, such as welfare programs and income support.