The Nominal Interest Rate in an Economy Is 5 Percent

Multiple Choice

The nominal interest rate in an economy is 5 percent, and there is also a 15 percent probability of having cash lost or stolen in the economy.Given this information, what is the cost of going to the ATM for an individual who spends $10 daily and has a total cost of holding cash = (365/T) + T.Assume that the individual visits the ATM once in every T days.

A) $1
B) $2
C) $3
D) $4