Question

Lynn Carter is paid $8000 every 30 days. Her salary is deposited initially in her bank. She spends all her money at a constant rate over the 30 days and must pay cash. She can

1) withdraw all of the money at once;

2) withdraw half at once and the rest after 15 days;

3) withdraw one-third at once, one-third after 10 days, and one-third at 20 days;

4) make any number of evenly spaced withdrawals.

Each withdrawal costs her $4 in terms of time and inconvenience. For each day that Lynn has a dollar in the bank, she gets 0.06 cents (0.0006 dollars) in interest.

Create a table showing transaction costs, interest earned, and total net earnings (+) or cost (-) associated with one, two, three, four, and five withdrawals per month.

Answer 1