Use the Baumol-Allais-Tobin (BAT) Model to determine the optimal cash balance for the following branch of Winter Bank PLC.
Suppose the barnch starts off at week 0 with a cash balance of £2 million.
Each week, outflows exceed inflows by £0.5 million.
F = £6,000 is the fixed cost incurred each time the branch trades money market securities
R is the interest rate on money market securities = 5% p.a.