Barclays Bank plans to launch a new deposit campaign next week in hopes of bringing in from $150 million to $900 million in new deposit money, which it expects to invest at a 6.5% yield. Management believes that an offer rate on new deposits of 2.75% would attract $150 million in new deposits and rollover funds. To attract $300 million, the bank would probably be forced to offer 3.25%. Barclays forecast suggests that $450 million might be available at 3.75%. $600 million at 4%, $750 million at 4.25%, and $900 million at 4.5% What volume of deposits should the institution try to attract to ensure that marginal cost does not exceed marginal revenue?
