Suppose the expected inflation in the U.S. on January 1, 1988 was projected at 5% annually for the next 5 years and at 12% annually in Italy for the same time period, and the lira/$ spot rate that day was currently at L2400 = $1, then the PPP estimate of the spot rate five years from now was

Select one:

a. 2250

b. 2560

c. 1738

d. 3314