Use the following information to calculate the interest rate on an eight-year bond just issued by Becher Inc.

Inflation: next two years= 2%

year 3 and beyond = 4%

Pure/Real Risk Free Rate = 2%

Maturity Risk Premium = zero for a 1-year maturity, increasing by .1% each year thereafter

Default Risk Premium = 1.5%

Liquidity Risk Premium = 0.0% for treasuries; 0.5% for Corporate bonds

Part 2:What is the interest rate that would be applied to the Becher Inc Bond?