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The interest rate outlook for MateoDiz, Inc. is given in the following information. - The pure rate of interest is 4.0%. - Inflation is expected
The interest rate outlook for MateoDiz, Inc. is given in the following information. - The pure rate of interest is 4.0%. - Inflation is expected to increase in the future from its current low level of 2%. Predicted annual inflation rates are shown in the table. - The default risk premium will be 0.2% for one-year debt, but will increase by 0.1% for each additional year of term to a maximum of 1.1%. - The liquidity premium is zero for one- and two-year debt, 0.5% for three-, four-, and five-year terms, and 1% for longer issues. - The maturity risk premium is zero for a one-year term and increases by 0.2% for each additional year of term to a maximum of 2%. Use the interest rate model to estimate market rates on the firm's debt securities of the following terms: 1 to 5 years, 10 years, and 20 years. Round your answers to one decimal place and include % signs. The rate for a 1 year term security is The rate for a 2 year term security is The rate for a 3 year term security is The rate for a 4 year term security is The rate for a 5 year term security is The rate for a 10 year term security is The rate for a 20 year term security is
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