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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A:

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