Question: 4. (10 points) Papa John's Pizza (NASDAQ:PZZA) opened its first store in Suzhou, China. The price of a large Epic Meatz pizza in Suzhou is

4. (10 points) Papa John's Pizza (NASDAQ:PZZA) opened its first store in Suzhou, China. The price of a large Epic Meatz pizza in Suzhou is 80.00 Chinese yuan. The price of the same Epic Meatz pizza is $14.90 in New York. The exchange rate between Chinese yuan (1) and U.S dollars is 46.56/$. (2) According to purchasing power parity (applied to Papa John's prices), is the Chinese yuan overvalued or undervalued? By what percent is the yuan overvalued or undervalued? (b) Fill in the nine missing cells in the table below. Country Currency BigMac Price in Local Currency Actual Exchange Rate org Currency per 5) Local BigMac Price in Dollars PPP-Implied Exchange Rate foreign currency per ) Over-/Under Valuation against the U.SS U.S. Malaysia Switzerland Norway Dollar Ringgit Franc Krone 5.79 12.99 6.50 57.90 1.00 4.10 0.93 +10.0%

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