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 4% in Canadian dollars. If the peso is expected to depreciate by 9.74% 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 ____ (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 Canadian dollars.

B.The loan in Mexican pesos.