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Kern Corporation's 5-year bonds yield 7.30%. The real risk-free rate is r*-2.5%, the default risk premium for Kern's bonds is DRP = 1.90%, the liquidity

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Kern Corporation's 5-year bonds yield 7.30%. The real risk-free rate is r*-2.5%, the default risk premium for Kern's bonds is DRP = 1.90%, the liquidity premium on Kern's bonds is LP- 1.3%, and the maturity risk premium is found with the formula MRP-(t-1) x 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on Kern's 5-year bonds? (2 points)

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