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Part 1

Starbucks (Croatia).Starbucks opened its first store in Zagreb, Croatia, in October 2010. In Zagreb, the price of a tall vanilla latte is

25.73

Croatian kunas (kn or HRK). In New York City, the price of a tall vanilla latte is

$2.66.

The exchange rate between Croatian kunas and U.S. dollars is

kn5.6288=$1.

According to purchasing power parity, is the Croatian kuna overvalued or undervalued?

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Part 1

The percentage of overvaluation or undervaluation is

enter your response here%.

(Round to two decimal places.)

Part 2

According to purchasing power parity, the Croatian kuna is (overvalued / underrvalued)