Jayden has a relatively stable income of $ 300 million per year. Jayden constantly spends 80%...

Jayden has a relatively stable income of $ 300 million per year. Jayden constantly spends 80% of his income on consumption goods each month and use the rest of his income for a vacation abroad at the end of the year. Before 20% of his income used, Jayden have the option to:
(1) save their money in the form of savings with an annual interest rate (4%) and have no administration fees, or
(2) buying bonds with a yield of 7% and a brokerage fee of 100 thousand per transaction.
Jayden is assumed to manage his expenses optimally by making cash withdrawal transactions of n, decide to buy bonds of n - 1 during the year and make the bond sale transaction on end of the year to finance his vacation needs.
Based on the information above, determine the amount of money requested for transactions (transaction demand for money) Mtr !

Expert Solution

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Rahul Sunny answered 1 year ago

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Jayden has a relatively stable income of $ 300 million per year. Jayden constantly spends 80%...

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