Suppose that a Big Mac costs \($5.00\) in New York and SF30 in Geneva. Suppose further that the price of 1SF on that day is 20¢. Calculate the purchasing power parity exchange rate between the Swiss franc and the dollar. Based on your calculation, is the SF overvalued or undervalued? Explain. Suppose now that a Big Mac costs £1.25 in London while the spot 330 Chapter 15 • Exchange Rates in the Long Run exchange rate is \($2.50.\) Is the pound overvalued or undervalued? Explain. Is the Big Mac a good basis for PPP calculations? Why or why not?