Xader Manalastas predicts a cash requirement of P25,000 over a 1-month period in which cash is expected to be paid constantly. The opportunity interest rate is 12% per annum. The transaction cost...

Xader Manalastas predicts a cash requirement of P25,000 over a 1-month period in which cash is expected to be paid constantly. The opportunity interest rate is 12% per annum. The transaction cost associated with each borrowing or withdrawal is P10.
a. What is the optimal transaction size?

b. Since it is known how much is usually available to meet operating needs, What is the average cash balance?