Once each year, C Gordon Inc. receives a $2 million payment.Of this amount, $700,000 is needed for cash payments made during the next year. Each time Smith deposits money in its account, a charge of $3.00 is assessed to cover clerical costs. If Smith can hold marketable securities which yield 5 percent, and then convert these securities to cash at a cost of only the $3 deposit charge, what is the total cost for one year of holding the minimum cost cash balance according to the Baumol model?

a.$187

b.$374

c.$458

d.$3,741

e.$7,483