Koy Corporation's 5-year bonds yield 8.85%, and 5-year T-bonds yield 4.95%. The real risk-free rate is r* = 3.30%, the inflation premium for 5-year bonds is IP = 1.25%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, 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 default risk premium (DRP) on Koy's bonds?

a. 3.50%

b. 2.75%

c. 3.90%

d. 3.15%

e. 4.65%