3. A bank manager wants to know what interest rate it should apply on a loan in its credit policy 4 years from now. The bank has to charge 1.2% more that the forward interest rate to compensate the cost of making a loan and make a profit. If the interest rates on one- to five-year bonds are currently 8%, 7%, 6%, 5%, and 4% and the term premiums for one- to five-year bonds are 0%, 0.15%, 0.25%, 0.30%, and 0.60%, compute what the interest rate on a one year loan the bank needs to charge 4 years from now.