c) Suppose a person wishes to spend $10,000 in a year. His hourly wage is $40 per hour and he spends half an hour on each of his visits to the bank. The nominal interest rate on his savings account at the bank is 10% . i) How often should he go to the bank? ii) On average, how much money should he carry on him? iii) Find the total cost at the optimum cash holding level.
c) Suppose a person wishes to spend $10,000 in a year. His hourly wage is $40 per hour and he spends half an hour on each of his visits to the bank. The nominal interest rate on his savings account at the bank is 10% . i) How often should he go to the bank? ii) On average, how much money should he carry on him? iii) Find the total cost at the optimum cash holding level.
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:c) Suppose a person wishes to spend $10,000 in a year.
His hourly wage is $40 per hour and he spends half an
hour on each of his visits to the bank. The nominal
interest rate on his savings account at the bank is 10% .
i) How often should he go to the bank? ii) On average,
how much money should he carry on him? iii) Find the
total cost at the optimum cash holding level.
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