Voice River, Inc. provides media$-$on$-$demand services via the Internet. Management has been studying current interest rates. A lender is willing to make a two$-$year loan to Voice River at a $13$ percent annual interest rate. The U$.$S$.$ government is currently paying $8$ percent annual interest on its two$-$year securities$.$ A$.$ If the real rate of interest is expected to be $3$ percent annually, what is the inflation premium expected at this time?

B$.$ What is the amount of the total risk premium that Voice River will have to pay?

C$.$ If a $1$ percent liquidity premium is built into the $13$ percent rate, what is the default risk premium on the loan?