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 12% in Mexican pesos or it can borrow at 5% in Canadian dollars. If the peso is expected to depreciate by 10.57% and the Canadian dollar is expected to appreciate by 3%, which loan has the lower effective annual interest rate?

Question .

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