Super Homework

Money and Banking

By: Aj. Theutthoune SOUKALOUN

Number one top richest singer in USA, Robyn Rihanna Fenty (Known as “Rihanna”)
has 2022 Net Worth at $1,700 million, and it makes her country’s youngest self-made
millionaire woman, the wealthiest female musician, and one of the richest singers
globally. You may heard about her song featuring with Eminem, “Love The Way You
Lie” which has 2,500 million views in YouTube.

Rihanna
Robyn Rihanna Fenty

Since she has billions of dollars, in 2023 she is thinking to invest and earn more
wealth. Below are some options she is thinking to do for the next 5 years:

Option 01 : Invest in real estate (a luxury mansion near the Marina Bay,
Singapore), which cost $900 million. Then the rest of her money will
invest in Tesla Stock (TSLA) in NYSE, which is currently $200 per
stock. The stock pays dividends every quarters for $0.30.

Option 02 : Invest in land for making a raspberry farm in Florida. The land costs
$700 million. She also will put her $600 million in US Treasury Bond,
which has face value of $200,000, maturity in 2028, and $20 coupon
for every month per bond. Then the rest of her wealth will be put in
 time deposit account in DBS Bank, Singapore with the annual interest
rate of 5%.

Option 03 : Invest $600 million to import super computers from Singapore, which
cost $5,000 per piece. The shipping of the computer costs her $75
million. However, this computer will be sold in USA right away (2023)
for $6,500 per piece. Moreover, she imported $350million of timber
from Laos and hope to sell it in USA in the next 5 years. Then half of
the rest of her money will be put in BCEL time deposit with the annual
interest rate of 10% and buying Lao Government Bonds with a face
value of LAK 1,500 million and LAK 200 million annual coupon per
bond.

Option 04 : She borrows money from Washington Mutual Bank for $500 million
with loan interest rate of 10%. Together with her total wealth and the
borrowing money, she deposits right away in Mizuho Bank, Japan with
annual intestate rate of 12% for 5 years while the exchange rate in
2023 is USD 1 = JPY 130. Then she will use her total return (in USD
currency) in the next 5 years to buy LAK currency. Once she got LAK
currency, she then convert it into SGD in the hope of capital gain from
the exchange rate, before she brings her money home to USA.

Additional Information:

In 2023: the exchange rate

 USD 1 = SGD 1.40
 USD 1 = LAK 15,000
 SGD 1 = LAK 10,000
 USD 1 = JPY 130

In 2028:
 Singapore economy will be growing, which results inflation rate high
at 10%, stock index increases 30%, and Singapore Dollar (SGD) is
depreciated 45% against USD.
 USA economy will be slow down, as a result, its inflation rate will be
only 5%, and stock index increase 30%.
 Lao economy will be stable with the inflation rate of 25%, Lao Kip
(LAK) is depreciated 50% against USD and 35% against SGD.
 Japan economy is booming and its currency will be appreciated 10%
Question:

If you are Rihanna’s most sophisticated and intelligent financial supervisor,

(1) What is a rate of return in each option? (Show your calculations)

(2) Which option will you suggest her to invest in order to gain highest return?