The Chinese yuan has an annual interest rate of 4.5 percent and is expected to appreciate by 3 percent against the dollar.(1) From a U.

The Chinese yuan has an annual interest rate of 4.5 percent and is expected to appreciate by 3 percent against the dollar.  (1) From a U.S. perspective, calculate the effective financing rate from borrowing yuan; (2) would the financing rate be higher or lower if the Chinese yuan depreciates against the dollar? Explain.