Suppose that your weekly cash expenses are $60. Every time you withdraw money from the automated...

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Question

Suppose that your weekly cash expenses are $60. Every time you withdraw money from the automated...

Suppose that your weekly cash expenses are $60. Every time you withdraw money from the automated teller at your bank, you are charged $0.25. Your bank account pays interest of 2% annually.

a.	How often should you withdraw funds from the bank? (Round your answer to 2 decimal places.)

	You should go to the bank about once every

b.	What is the optimal-sized withdrawal? (Round your answer to the nearest whole dollar.)

	Optimal-sized withdrawal

c.	What is your average amount of cash on hand? (Round your answer to the nearest whole dollar.)

	Average amount of cash on hand

business accounting

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Answer 1

Answer #1

Answer is given below

Economic Order Quantity model has been applied to arrive at solution.

Weekly withdrawal Annual cash requirement (52 weeks X $60) Charge per withdrawal $60 3,120 $0.25 Interest cost 2% Interest co

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Answer 2

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Suppose that your weekly cash expenses are $60. Every time you withdraw money from the automated...

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Suppose that your weekly cash expenses are $60. Every time you withdraw money from the automated...

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