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 t4% in Canadian dollars. If the peso is expected to depreciate by 11.73% and the Canadian dollar is expected to appreciate by 2%, 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.)

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 t4% in Canadian dollars. If the peso is expected to depreciate by 11.73% and the Canadian dollar is expected to appreciate by 2%, 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.)

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter21: International Cash Management

Section: Chapter Questions

Problem 12QA

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