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 11% in Mexican pesos or it can borrow at 3% in Canadian dollars. If the peso is expected to depreciate by 10.87% and the Canadian dollar is expected to appreciate by 2%, which loan has the lower effective annual interest rate?
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Part 1
The effective annual interest rate of the loan in Mexican pesos is enter your response here%.
(Round to two decimal places.)
Part 2
The effective annual interest rate of the loan in Canadian dollars is enter your response here%.
(Round to two decimal places.)
Part 3
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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