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 8% in Mexican pesos or it can borrow at 5% in Canadian dollars. If the peso is expected to depreciate by 11.12% and the Canadian dollar is expected to appreciate by 6%, which loan has the lower effective annual interest rate?

The effective annual interest rate of the loan in Mexican pesos is

_________%. (Round to two decimal places.)

The effective annual interest rate of the loan in Canadian pesos is

_________%. (Round to two decimal places.)

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