California wants to issue a municipal bond that is competitive with corporate bonds of the same maturity, liquidity and risk. The corporate bonds have an average yield to maturity of $5\mathrm{.}4\%.$

Attempt $1/10$ for $9\mathrm{.}5$ pts$.$

Part $1$

What yield to maturity should California offer on the new municipal bond? Assume that the marginal tax rate of the average investor is $33\%.$