Expansion using one of two foreign lending facilities

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Reference no: EM131629172

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 5?% in Canadian dollars. If the peso is expected to depreciate by 8.38?% 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:

The effective annual rate of the loan in Canadian dollars is expected to be:

Reference no: EM131629172

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