The Argentina peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002, the Argentina peso was floated. On January 29, 2003 it was trading at Ps 3.25/$. During that one-year period, Argentina 's inflation rate was 21% on an annualized basis. Inflation in the United States during that same period was 2.5% annualized.

A What should have been the exchange rate in January 2003 if PPP held?

B By what percentage was the Argentina peso undervalued on an annualized basis?