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

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 11% in Mexican pesos or it can borrow at 6% in Canadian dollars. If the peso is expected to depreciate by 10.67% and the Canadian dollar is expected to appreciate by 5%, which loan has the lower effective annual interest rate? The effective annual interest rate of the loan in Mexican pesos is %

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