Maria's Knick Knacks is a boutique store that sells seasonal merchandise. For this Christmas season, Maria paid $50,000 for an order of figurines, tree ornaments, candles, and wreaths. Maria marks up each piece of merchandise by 80% to arrive at the selling price. Thus, if Maria pays $20 for a figurine, she will price it at $36.

Unfortunately, sales were well below expectations, and Maria's revenues were only $60,000 (far less than the $90,000, or $50,000 1.80, that she had hoped for). This presents a quandary for Maria, who is contemplating what to do with the unsold merchandise. She has identified five options.

Option 1: To store the unsold merchandise for the next 10 months and attempt to sell it the next Christmas season. Maria estimates that it would cost her $4,000 to properly pack, store, and then unpack all of the unsold merchandise. In addition, because the merchandise would be somewhat dated, Maria believes that she will only be able to sell 30% of the remaining merchandise the following year (at the current year's retail price). Any unsold items will have negligible resale value, and Maria plans to donate them to a local charity.

Option 2: Hold a January "85% off" after-Christmas sale. Maria believes that she can sell 100% of the unsold merchandise with 85% off sale.

Option 3: Hold a January "75% off" after-Christmas sale. Maria believes that she can sell 60% of the unsold merchandise with 75% off sale.

Option 4: Hold a January "65% off" after-Christmas sale. Maria believes that she can sell 50% of the unsold merchandise with 65% off sale.

Option 5: Hold a January "55% off" after-Christmas sale. Maria believes that she can sell 35% of the unsold merchandise with 55% off sale.

These are the only options Maria plans to consider.

Needs:

a)What is the net cash flow associated with each of Maria's options?

b)Based on your answer to part (b), what is the opportunity cost associated with each option?

c)What would you recommend to Maria?