Austin needs $10,000 spending money each year, which he takes from his savings account by making N

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Austin needs $10,000 spending money each year, which he takes from his savings account by making N equal withdrawals. Each withdrawal incurs a transaction fee of $8, and money in his account earns interest at the simple interest rate of 4%.

a. The total cost C of managing the account is the transaction cost plus the loss of interest due to withdrawn funds. Express C as a function of N.

b. How many withdrawals should Austin make each year to minimize the total transaction cost C(N)?

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Calculus For Business, Economics And The Social And Life Sciences

ISBN: 9780073532387

11th Brief Edition

Authors: Laurence Hoffmann, Gerald Bradley, David Sobecki, Michael Price

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