Purchase Solution

# Reselling Furby Toys Options

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It is 1998, and you own a toy store that sells Furby toys. You have a regular customer who buys your Furby toys and resells them online. She wants to buy your entire shipment of 100 Furby toys, but she can't pay you for all of them until the next year. She approaches you and proposes two options: a. If she can have the 100 Furby toys today, she will pay you \$40 for each Furby one year from now. b. If she can't have the 100 Furby toys today, she will buy 80 Furby toys today at their normal price, \$35 each. If you choose this option, you will put all the money from the sale into a one-year savings account that has a 6% interest rate.

##### Solution Summary

The solution contains over 130 words and computations comparing Options A and B.

##### Solution Preview

Find the Future Value (FV) of each option 1 year into the future.

Option A:
Since the customer will pay you \$40 for each Furby one year from now,
FV of ...

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###### Education
• MSc, California State Polytechnic University, Pomona
• MBA, University of California, Riverside
• BSc, California State Polytechnic University, Pomona
• BSc, California State Polytechnic University, Pomona
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• "Hello, thank you for your answer for my probability question. However, I think you interpreted the second and third question differently than was meant, as the assumption still stands that a person still independently ranks the n options first. The probability I am after is the probability that this independently determined ranking then is equal to one of the p fixed rankings. Similarly for the third question, where the x people choose their ranking independently, and then I want the probability that for x people this is equal to one particular ranking. I was wondering if you could help me with this. "

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