Essay
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?
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a.The cost of going to the ATM...View Answer
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Correct Answer:
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