Picard Industries Requires $250,000 a Week to Pay Its Bills

Picard Industries requires $250,000 a week to pay its bills. The fixed cost of transferring money is $65 per transfer. The standard deviation of the weekly cash flows is $25,000 and the lower cash balance limit is $40,000. Assume the applicable annual interest rate is 5% for the BAT model, and the applicable weekly interest rate is 0.1% for the Miller-Orr model.

Using the BAT model, what is the total cost of holding cash?

A) $3,117
B) $4,596
C) $5,580
D) $8,664
E) $9,192