BullsNBears, a Purveyor of fiNancial Databases, Estimates It They Disburses

BullsNBears, a purveyor of financial databases, estimates it they disburses $440,000 monthly in order to pay bills. The firm's opportunity rate is 5%. The fixed cost of transferring money is $25 per
Transfer. Based on historical data, the standard deviation of monthly cash flows is $15,000 and the
Lower cash balance limit is $20,000. For Miller-Orr model questions, assume the interest rate is
0) 5% per month.
Using the BAT model, what is the opportunity cost of holding cash?

A) $1,817
B) $1,923
C) $2,405
D) $2,664
E) $3,111