The price of a Big Mac in the U.S. is $7.4 and the price in Mexico is Peso 15.3. What is the implied PPP (E(S)) of the Peso per dollar (Peso/$)? Given the exchange rate (P 5/$), is the peso undervalued or overvalued? *

Ps.113.22/$ -undervalued

Ps.7.90/$ - undervalued

Ps0.48/$ -overvalued

Ps.2.07/$ -undervalued

Ps.7.90/$- overvalued

Ps.113.22/$- overvalued

Ps0.48/$ - undervalued

Ps.2.07/$ -overvalued