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Suppose You Have Weekly Cash Expenses of $400

question 55

Essay

Suppose you have weekly cash expenses of $400.The bank charges $0.4 every time cash is withdrawn.The bank pays 1% interest per year.Given this information, what is the optimal withdrawal size? What is the average amount of cash on hand? How often should you withdraw funds?


Definitions:

Exponent

An exponent refers to a mathematical notation indicating the number of times a number (the base) is multiplied by itself.

Normal Distribution Curve

A bell-shaped curve that represents the distribution of a set of data where most observations cluster around the mean.

Binomial Distribution Curve

A probability distribution graph that represents the likelihood of a given number of successes over a series of trials, with only two possible outcomes.

Poisson Distribution Curve

A graphical representation of the Poisson distribution, showing the probability of a given number of events over a fixed interval.

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