7. Calculating interest rates The real risk-free rate (r) is 2.80% and is expected to remain constant into the future. Inflation is expected to be 5.10% per year for each of the next two years and 3.90% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.10(t1)%, where t is the security's maturity. The liquidity premium (LP) on all Harrington Horticulture Co,'s bonds is 0.50%. The following table shows the current relationship between bond ratings and defauit risk premiums (DRP): Harrington Horticulture Co. issues eleven-year, AA-rated bonds. What is the yleld on one of these bonds? (Hint: Disregard cross-product terms; that is, If averaging is required, use on anthmetic average.) 9.22% 8.22% 8.72% 5.10%