$.$ A company needs TZS $150,000,000$ each year for regular payments. Converting

the company$$s short$-$term investments into cash to meet these regular payments

incurs a fixed cost of TZS $400,000$ per transaction. These short$-$term investments

pay interest of $5\%$ per year, while the company earns interest of only $1\%$ per year

on cash deposits.

REQUIRED

i$.$ According to the Baumol Model, what is the optimum amount of short$-$term

investments to convert into cash in each transaction?

ii$.$ Discuss three $(3)$ limitation of Baumol Model