Bonus Problem 2 (Optional, 25 marks) Two investment funds (Fund A and Fund B) are launched recently. You are given that Fund A earns compound interest at an annual nominal interest rate 6% compounded monthly. The interest is paid at the end of every month. Fund B earns compound interest at an annual nominal interest rate 10% compounded continuously. However, a minimum deposit of $100000 is required. An investor has $50000 initially and would like to do an investment for 15 years. It is clear that the investor cannot invest the money into fund B immediately. Instead, he first deposits all wealth into fund A. After that, he deposits $500 into fund A at the end of every month until the account balance reaches or exceeds $100000. Once the account balance of fund A reaches or exceeds $100000 at some date, the investor withdrawal all money from the account and invest all wealth into fund B. After that, he deposits $1000 into fund B until the end of 15th year (including the end of 15th year). At the end of 15th year, he withdraws all money from fund B and end the investment. Question Determine if the IRR of the entire investment is greater than 9%. Provide full justification (as mentioned in class) to your answer. Please also include a suitable cashflow diagram to support your answer. Bonus Problem 2 (Optional, 25 marks) Two investment funds (Fund A and Fund B) are launched recently. You are given that Fund A earns compound interest at an annual nominal interest rate 6% compounded monthly. The interest is paid at the end of every month. Fund B earns compound interest at an annual nominal interest rate 10% compounded continuously. However, a minimum deposit of $100000 is required. An investor has $50000 initially and would like to do an investment for 15 years. It is clear that the investor cannot invest the money into fund B immediately. Instead, he first deposits all wealth into fund A. After that, he deposits $500 into fund A at the end of every month until the account balance reaches or exceeds $100000. Once the account balance of fund A reaches or exceeds $100000 at some date, the investor withdrawal all money from the account and invest all wealth into fund B. After that, he deposits $1000 into fund B until the end of 15th year (including the end of 15th year). At the end of 15th year, he withdraws all money from fund B and end the investment. Question Determine if the IRR of the entire investment is greater than 9%. Provide full justification (as mentioned in class) to your answer. Please also include a suitable cashflow diagram to support your
