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 5% in Canadian dollars. If the peso is expected to depreciate by8.88% and the Canadian dollar is expected to appreciate by 3%, which loan has the lower effective annual interestrate?

The effective annual interest rate of the loan in Mexican pesos is ____%. (Round to two decimalplaces.)

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

____%. (Round to two decimalplaces.)

Which loan has the lower effective annual interestrate?