YYY Bank has several customers in various segments. The bank wants to correctly price term loans to corporate businesses in its portfolio. The following information is available:

• The bank's general hurdle rate is 6.50%.
• Corporate businesses are to provide collateral to the value of 60% of term loans.
• Historically the default rate for corporate businesses is 0 (nil).

Calculate the interest rate Bank YYY should charge on term loans to corporate businesses. Show your workings and answer in the space provided below.