Hubbard Industries is an all-equity firm whose shares have an expected return of 9.1 %. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is 0.45. Due to the increased risk, shareholders now expect a return of 12.5 %. Assuming there are no taxes and Hubbard's debt is risk-free, what is the interest rate on the debt?