Kern Corporation's 5-year bonds yield 7.35% and 5-year T-bonds yield 4.45%. The real risk-free rate is r* = 2.90%, the default risk premium for Kern's bonds is DRP = 1.60% versus zero for T-bonds, the liquidity premium on Kern's bonds is LP = 1.30%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) 0.1%, where t = number of years to maturity. What is the inflation premium (IP) on all 5-year bonds?

a. 0.30%

b. 1.12%

c. 2.45%

d. 1.15%

e. 1.60%