As of July 2009, Google (ticker: GOOG) had no debt. Suppose the firm were to issue $96 billion in zero-coupon senior debt, and another $38 billion in zero-coupon junior debt, both due in January 2011. Suppose Google had 320 million shares outstanding, trading at 422.27 per share, implying a market value of $135.1 billion. The risk-free rate over this horizon is 1.0%. Use the option data in the table, to determine the rate Google would pay on the junior debt issue. (Assume perfect capital markets.)

GOOG422.27+7.87

Jul 13 2009 @ 13:10ESTVol2177516

CallsBidAskOpen

Int

11 Jan 150.0 (OZF AJ)273.60276.90100

11 Jan 160.0 (OZF AL)264.50267.520 82

11 Jan 200.0 (OZF AA)228.90231.20172

11 Jan 250.00 (OZF AU)186.50188.80103

11 Jan 280.0 (OZF AX)162.80165.0098

11 Jan 300.0 (OZF AT)148.20150.10408

11 Jan 320.0 (OZF AD)133.90135.9063

11 Jan 340.0 (OZF AI)120.50122.6099

11 Jan 350.0 (OZF AK)114.10116.10269

11 Jan 360.0 (OZF AM)107.90110.0066

11 Jan 380.0 (OZF AZ)95.8098.0088

11 Jan 400.0 (OZF AU)85.1087.002577

11 Jan 420.0 (OZF AG)74.6076.9066

11 Jan 450.0 (OZF AV)61.8063.30379

The rate Google would pay on the junior debt issue is _____%. (Round to one decimal place)