Currently, you can exchange 100 for $125. The inflation rate in Europe is expected to be 2.5 percent. In one year, it is expected that 100 can be exchanged for $125.88. Assume relative purchasing power parity exists. What is the expected inflation rate in the U.S.?

a. 3.84 percent

b. 3.20 percent

c. 4.26 percent

d. 5.21 percent