Advani Chemical Limited estimates its total cash requirement as Kshs 20 Million next year. The companys opportunity cost of funds is 15 per cent per annum. The company will have to incur Kshs 150 per transaction when it converts its short-term securities to cash.

a)Determine the optimum cash balance.

b)How much is the total annual cost of the demand for the optimum cash balance?

c)How many deposits will have to be made during the year