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(Solved): 2. A Colombian company that sells coffee is in need of a loan to expand their operations. After care ...



2. A Colombian company that sells coffee is in need of a loan to expand their operations. After careful consideration, they have realized that Mexico has lower interest rates than Colombia. They have also forecasted the following possible percentage change between Mexican and Colombian Peso: Possible Percentage ChangeProbability-1.50%20%2.0%50%3.20%30% You also have the following information: 1. Mexico Interest Rate: 9.5% 2. Colombia Interest Rate: 13% 3. 1 Colombian Peso equals 0.005 Mexican Peso Determine the expected effective financing rate. Is Mexican Peso financing a better option the Colombian Peso as the company originally thought?



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