c. XYZ Ltd makes payments of sh 16000 per week with an applicable interest rate on the marketable security of 8% per annum and every security cost sh 30.

Assume there are 50 weeks in a year.

Required

Using the Baumols model of cash management

i. Determine the optimal amount of security to be converted into cash. (2 marks)

ii. Determine the total number of transfers required in a years. (2 marks)

iii. Determine the total cost of maintaining the balances in a year. (2 marks)

SHOW YOUR WORKING