Your company is planning to issue new bonds soon. Your boss gives you the following information and asks you to calculate the interest rate at which to issue the bonds. Given this information, what interest rate do you recommend?

Expected Inflation Rate: $3\%$

Interest rate of similar corporations$($AAA rated$)30-$year bonds: $6\mathrm{.}5\%$

Interest rate of $30-$Year Treasury Bonds: $5\mathrm{.}38\%$

Interest rate of $3-$month treasury bills: $4\mathrm{.}89\%$

Liquidity$-$risk premium: $0\mathrm{.}03$