Question: Denim Industries can borrow its needed financing for expansion using one of two foreign lending facilities. It can borrow at a nominal annual interest rate

Denim Industries can borrow its needed financing for expansion using one of two foreign lending facilities. It can borrow at a nominal annual interest rate of 12% in Mexican pesos or it can borrow at 3% in Canadian dollars. If the peso is expected to depreciate by 9.26% and the Canadian dollar is expected to appreciate by 5%, which loan has the lower effective annual interest rate?

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