Original: This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.
Simplified: This value is then compared with the actual exchange rate. If the rate is lower, then the first currency is under-valued (according to purchasing power parity (PPP) theory) compared with the second currency.