Widget Wonders anticipates that is annual cash needs will be $125000. However it recognizes that any cash it holds won%u2019t earn any interest and the interest rate on its money market account is 1.95% p.a. Moving funds from the money market account costs $24
per transaction. Given this information determine:
Optimal size conversion and optimal number of conversions per year?
What is the average level of cash that Widget Wonders holds during the year?
Given your answers for (a) and (b) what is the cost to Widget Wonders in maintaining the optimal cash balance?