Please give me some direction on this problem. I think I am putting things in the wrong order.

A basket of goods costs $3,725 in the U.S. Exact same goods basket costs 3,136 in Europe. The exchange rate is .8725/$

What is the over/undervaluation of the $?

What is the over/undervaluation of the ?

When I start I am converting the 3,136 to $ by 3,136 * .8725/$ = $2736.16 then use the $3725-$2736.16 / $2736.16 = which gives me 36.14% overvaluation of the US$. But I don't believe this to be the correct answer. 2736.16-3725 / 3725 = 26.55% undervaluation of the .