Assignment:
You are trying to minimize the amount that you are in debt from your living expenses while in college. You estimate that your expenses each month is $900. You have a bank that you work with and they will always give you a loan at the start of any month. The loan can be for any value up to $4,000. The loan costs an additional $100 for the paperwork to process the loan. Thus, you only get to use $3,900 from a S4,000 loan or $1,800 from a $1,900 loan.
You can assume that all of your budget money is spent at the beginning of the month (moved into a non interest bearing checking account. Any money that is left in the savings account over a month earns .1% interest. Any dollar borrowed costs 1% each month. Write an IP to determine your optimal borrowing strategy to survive this year. Note: You only need this for 9 months. You will begin paying on this money after the school year is over.