Kelsie has$1.2 million that she would like to invest either domestically or in South Africa. The annual interest rate on a U.S. investment is 16% while it is 20% in South Africa.

i.) What is the dollar value of the return that Kelsie will get after investing her money in the U.S. for one year?

ii.) If the one year forward rate of the dollar price of 1 South African rand (ZAR) is 0.06, what is the spot rate assuming the covered interest parity condition holds?

iii.) Before she makes up her mind on where to invest, Kelsie finds out that in Botswana, a country neighboring South Africa, the one year interest rate on investment is 22%. The price of 1 Botswana pula in South African rand is 1.40.

a) What is the price of a pula in U.S. dollars?

b) What forward rate will make the covered interest parity condition to hold between the U.S. and Botswana?

*Please justify all answers :)