The US economy is suffering from high inflation. Prices are rising an an annualized rate of $5\%.$ The government is in a bind and you expect them to raise the income tax rate to $30\%$ and keep it there for the foreseeable future. The government is selling $5$ years bonds and you would like to buy them if the bond pays you a $2\%$ real rate of return.

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What is the minimum rate you would accept?

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$10\mathrm{.}14\%$

$7\mathrm{.}14\%$

$6\mathrm{.}00\%$