Problem $1-46($LO $1-3,$ LO $1-4)($Static$)$

Fergie has the choice between investing in a State of New York bond at $5$ percent and a Surething Incorporated bond at $8$ percent.

Assuming that both bonds have the same nontax characteristics and that Fergie has a $30$ percent marginal tax rate, what interest rate

does the State of New York bond need to offer to make Fergie indifferent between investing in the two bonds?

Note: Do not round intermediate calculations. Round your answer to $1$ decimal place.