Managers at Baker Hughes are considering expanding their oilfield services operations in eastern New Mexico. The anticipated lifetime of this new project is 9 years. To raise the necessary long-term capital, managers plan to issue bonds with a maturity that matches the expected project lifetime.

• The risk of the proposed project is about the same as the risk of the company as a whole.
• The financial condition and current levels of debt at the company are such that the new bond issue would not significantly increase its risk of default.

Baker Hughes does not have a bond outstanding whose time to maturity matches the expected project lifetime. However, the company does have two other bonds outstanding:

• A bond that matures in 6 years with a YTM of 2.496%.
• A bond that matures in 15 years with a YTM of 5.645%.

Given this information, what would be a reasonable estimate of the required rate of return for potential bond investors (i.e., an estimated YTM for the new bond), if the company decides to raise funds for the new project by selling bonds?

Give your answer in percent to three decimal places, e.g., 7.123%. However, do not type the % symbol.