Computing ppp implied eur and usd exchange rates

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Reference no: EM13116346

Chase Econometrics has just published projected inflation rates for the United States and Euro-zone for the next five years. U.S. inflation is expected to be 2% per year, and Euro-zone inflation is expected to be 3.5% per year. If the current exchange rate is EUR/USD 1.4500, what should the expected PPP implied EUR/USD exchange rates be five years from now?

A. 1.3479

B. 1.5597

C. 1.4289

D. 1.4713

Reference no: EM13116346

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