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)
Answer: B
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