Back to Assignment Attempts Keep the Highest / 20 3. Calculating interest rates The real risk-free rate (r) is 2.8% and is expected to remain constant Inflation is expected to be 7% per year for each of the next three years and 6% thereafter The maturity risk premium (MRP) is determined from the formula: 0.1/- 1), where t is the security's maturity. The liquidity premium (L.) on all Dare Satellite Corp. bonds is 1.05%. The following table shows the current relationship between bond ratings and default risk premiums (DRP): Default Risk Premium Rating US Treasury AAA 0.609 3 3