Hubbard Industries is an all-equity firm whose shares have an expected return of 8.5%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is 0.38. Due to the increased risk, shareholders now expect a return of 10.9%. Assuming there are no taxes and Hubbard's debt is risk-free, what is the interest rate on the debt? The interest rate is %. (Round to two decimal places.)