Kern Corporation's 5-year bonds yield 8.10% and 5-year T-bonds yield 4.90%. The real risk-free rate is r* = 2.40%, the default risk premium for Kern's bonds is DRP = 1.90% 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. 2.60%

b. 0.60%

c. 2.05%

d. 1.90%

e. 2.10%