ABC Company is planning to issue a $4-$year bond. The only other debt that the company currently has outstanding is a $3\%$ anmual$-$pay bond, which is currently trading at $102$ per $100$ of par and which has $3$ full years to maturity.

The following information is provided:

Cumently there are no outstanding govemment bonds with $3$ years to maturity.

The vield on a $2-$year govemment bond is $0\mathrm{.}8\%,$ while the yield on a $4-$year government bond is $1\mathrm{.}4\%.$

The term structure of credit spreads for bonds with the same credit rating as ABC Company suggests that $4-$year spreads are around $25$ bps higher than $3-$year spreads.

The expected market discount rate on ABC's planned $4-$year bond issue is closest to:

$2\mathrm{.}35346$

$1\mathrm{.}4524\%$

$2\mathrm{.}3024\%$