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Given that probability of theft is 12% Interest rate is 3% Total cost of holding and theft is 0.375*T We know that (Daily spending*3%*T)/2+(daily spending*12%*T)/2=0.375*T
Given that probability of theft is 12% Interest rate is 3% Total cost of holding and theft is 0.375*T We know that (Daily spending*3%*T)/2+(daily spending*12%*T)/2=0.375*T After solving we get Daily spending=$5
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