write my assignment 2603

9. Suppose the nominal interest rate is 3 percent, the cost of going to the ATM is $1.50, you have a 12 percent probability of having your cash lost or stolen, and you spend $5 each day.

a. What is your total cost of holding cash as a function of the number of days between trips to the ATM?

b. How often will you go to the ATM to minimize your costs?

10. Suppose you have a 20 percent probability of having your cash lost or stolen, and you spend $25 each day. Your total cost of holding cash is (182.50/T) + (3.75 × T).

a. What is your cost of going to the ATM?

b. What is the nominal interest rate?

c. How often will you go to the ATM to minimize your costs?

 
"Not answered?"
Get the Answer