An Individual Spends $5 Daily and Also Spends an Additional

question 58

Multiple Choice

An individual spends $5 daily and also spends an additional $1.50 each time he goes to an ATM.There is also a 12 percent risk of having his cash lost or stolen.If his total cost of holding cash is (547.50/T) + (0.375 × T) , then what is the ongoing nominal interest rate in the economy? Assume that the individual visits the ATM once in every T days.

• A)1 percent.
• B)2 percent.
• C)3 percent.
• D)4 percent.

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