The Cost of Going to an ATM Is $2 in an Economy.If

question 18

Multiple Choice

The cost of going to an ATM is $2 in an economy.If the nominal interest rate in the economy is 1 percent, what is the total cost associated with holding cash for an individual who spends $15 daily and has a 9 percent probability of having his cash lost or stolen? Assume that he visits the ATM once in every T days.

• A)(365/T) + (0.75 × T)
• B)(730/T) + (0.75 × T)
• C)(730/T) + (1.5 × T)
• D)(365/T) + (1.5 × T)

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