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 9% in Mexican pesos or it can borrow at 3% in Canadian dollars. If the peso is expected to depreciate by 9.95% and the Canadian dollar is expected to appreciate by 4%, 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 dollars is ____%. (Round to two decimal places.)

Which loan has the lower effective annual interest rate?(Select the best answer below.)

A.The loan in Mexican pesos.

B.The loan in Canadian dollars.

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