Steamliner, Inc. has a project that it expects will produce a cash flow of $2.9 million in 13 years. To finance the project, the company needs to borrow $1.6 million today. The project will also produce intermediate cash flows of $130,000 per year that the company can use to service semi-annual coupon payments. The firm's underwriter suggests that the market would be receptive to a 13-year bond with a face value of $2.4 million with a coupon payment of $65,000 every six months. Alternatively, Steamliner has the option to raise the $1.6 million by issuing 13-year zero coupon bonds with a face value of $2.0 million. What is the annualized yield to maturity (YTM) on the preferred option? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis.