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M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961M&B3 3rd Edition by Dean Croushore
Edition 3ISBN: 978-1285167961 Exercise 15
In the model of Tracy's decision about how often to go to the ATM in exercise 1, try to find a combination of parameters that would lead her to go to the ATM just once every 10 days. You can consider variations in Tracy's spending amount, her cost of using the ATM, the nominal interest rate, and the probability of having her cash lost or stolen. ( Hint: Use a spreadsheet program or use calculus.)
Exercise 1
Using a spreadsheet program or a calculator, solve Tracy's problem of how often to go to the ATM when the nominal interest rate on her bank account is 10 percent, she spends $30 each day, it costs her $0.50 each time she uses the ATM, and she thinks that there is a 15 percent chance that she will lose her cash or have it stolen. Under these conditions, how often does Tracy go to the ATM, and how much cash does she take out each time
Exercise 1
Using a spreadsheet program or a calculator, solve Tracy's problem of how often to go to the ATM when the nominal interest rate on her bank account is 10 percent, she spends $30 each day, it costs her $0.50 each time she uses the ATM, and she thinks that there is a 15 percent chance that she will lose her cash or have it stolen. Under these conditions, how often does Tracy go to the ATM, and how much cash does she take out each time
Explanation
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Verified
Letting the cost of each time...
M&B3 3rd Edition by Dean Croushore
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